Regulations hurting small banks didn't come from my law, Dodd-Frank architect says

Barney Frank: Dodd-Frank very pro-market

Smaller banks may be under significant burden from federal regulations, but not all of them came from the 2010 Dodd-Frank financial reform act, Barney Frank told CNBC on Tuesday.

The Democratic former U.S. representative from Massachusetts pushed back against Republican lawmakers' criticism that Dodd-Frank restricts small banks' ability to lend to lower-income loan seekers.

"It is not the case that the law has caused a problem with lending in general," Frank told "Squawk Box." "Lending has not diminished. Lending statistics [show] that the economy is doing fine from the standpoint of loans being made."

Frank admitted that there has been a shift away from lending by smaller banks, but said that many of the regulations hampering their progress are not part of the post-financial crisis reform he helped create.

"If you ask them, much of what they're complaining about in terms of regulation that has been a problem for them has nothing to do with the financial reform law that I worked on," Frank said.

Instead, responsibilities stemming from conservative money laundering prevention laws have added regulatory pressure, he said.

"The anti-money laundering that's aiming at drug smuggling and terrorists. Know your customer, all those things. You have to report if people are taking out more than $10,000 at a time. Those have nothing to do with our bill," Frank said.

The former lawmaker said the Patriot Act and anti-money laundering rules added to the Bank Secrecy Act, both introduced in Congress by Republicans, were the root causes of regulatory pressure on small banks.

"Interestingly, the right in America, politically, tended to push those harder. So they are glad to have some of the complaints about the money laundering and anti-corruption things kind of be blamed on us," Frank said.

After Dodd-Frank passed with provisions that helped smaller institutions like increasing the deposit guarantee, Frank said he was surprised by the hardships they faced in complying with the act.

As a result, Frank supported a 2013 initiative to exempt smaller banks from the Volcker rule, a piece of Dodd-Frank that limits banks from making certain investments with their own accounts, but said that Texas Rep. Jeb Hensarling prevented it.

"Interestingly, Mr. Hensarling, who had the power to put some of this through, wouldn't do that because he does not want to do things that would be helpful to the smaller banks," Frank said. "He wants to, frankly, capitalize in their dissatisfaction to weaken more substantial parts of the law."

A memo obtained by CNBC earlier this month revealed some of Hensarling's plans to scale back federal bank regulations, including reducing the influence of the Consumer Financial Protection Bureau.

Hensarling's office did not immediately respond to a request for comment.