The new risk-retention mandates outlined in the sweeping Dodd-Frank financial reform legislation are constrictive and prohibitive, according to the American Bankers Association. In a letter to various federal regulators, ABA President and Chief Executive Frank Keating said the requirements ultimately will hinder the entire market, exerting particular stress on smaller, community mortgage lenders. He urged Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and others to "avoid such ill effects" when the new rules are imposed. "The overwhelming majority of ABA members in every asset category and of every charter type and organizational structure have concerns about detrimental market and economic effects, which could be triggered by those new risk-retention requirements," Keating said. "Our members believe strongly that imposing too broad a risk-retention requirement – or imposing risk retention to achieve policy goals beyond improved underwriting – is likely to cause lenders to leave the marketplace and result in a constriction of credit to otherwise eligible borrowers," he said. Keating said allowing for the qualified residential mortgages that Congress said should be exempted from the requirements "is important to ensure the stability and recovery" of the market while avoiding unnecessary rules that don't address the systemic issues of the industry. Still, the risk-retention requirements should improve underwriting standards and limit many of the practices that contributed to the housing crisis of the past few years, the ABA said. Write to Jason Philyaw.