US risk council should probe foreclosure mess -Dodd

NEW YORK Mon Nov 8, 2010 10:55pm GMT

NEW YORK Nov 8 (Reuters) - The U.S. council created to oversee risks to the financial system needs to probe the housing foreclosure mess and recommend solutions, outgoing Democratic Senator Christopher Dodd said on Monday.

The council should "convene soon to consider the foreclosure crisis and make recommendations to deal with it," Dodd said at the Securities Industry and Financial Markets Association annual meeting.

Federal investigators are probing banks amid allegations they used shoddy paperwork to evict delinquent borrowers from their homes.

The Financial Stability Oversight Council was set up to identify risks to the financial system under the Dodd-Frank regulation bill, which Dodd helped craft.

The council, which is chaired by the Treasury secretary and composed of other regulators such as the Federal Reserve, is due to meet later in November.

"Here's a perfect case as to whether they can do their job," Dodd told reporters on the sidelines of the meeting.

The council is one of main pieces of the Dodd-Frank bill, which also created a federal watchdog to oversee consumer financial products, such as credit cards and mortgages.

Dodd on Monday urged the Obama administration to quickly appoint a director to head the Consumer Financial Protection Bureau. He reiterated that he did not think Elizabeth Warren, the Harvard Law School professor who was named to advise the White House and Treasury Department on how to set up the agency, should be chosen.

Dodd said Warren would be a good director but that he did not think the Senate would confirm her. Warren has been championed by liberals, but opposed by the financial industry and many Republicans.

Dodd is retiring from the Senate at the end of the year. His departure comes as many other Democrats in the House of Representatives and the Senate prepare to leave after Americans voted them out of office in the recent midterm congressional election. (Reporting by Rachelle Younglai; Editing by Leslie Adler)