EDITOR’S NOTE: Initial Look at Financial Regulatory Reform

By Keat Foong, Executive Editor Last week, President Obama put forward his proposals to make changes to the regulatory oversight of the financial system. Among the proposals, the “Financial Regulatory Reform Plan” would give the Federal Reserve and the Federal Deposit Insurance Corp. additional controls over financial institutions. It would require hedge funds and private equity funds to be registered with the Securities and Exchange Commission. And it would consolidate the agencies that oversee consumer debt banking into a regulator called the Consumer Financial Protection Agency. Where our industry is concerned, the plan would more tightly control banks that issue mortgage-backed securities. And it would require companies that issue mortgages to keep some of mortgages on their books, so that they are more careful about the lending that they do.  From more of a citizen’s point of view, the reform plan has been criticized as not being real reform, just as advocates at this point are worried that healthcare reform is in danger of becoming. But so far, from industries’ viewpoint, the Mortgage Bankers Association (MBA) says that it welcomes the coming debate over the regulation of the financial services industry. “As the past several years have shown, oversight of financial firms can and should be improved in order to better protect consumers and make sure the troubles in the financial sector are not repeated,” says John A. Courson, MBA’s president and CEO. “[W]e will continue to argue for one preemptive set of mortgage regulations throughout the country to replace the current patchwork of state and local laws.” MBA Chairman David G. Kittle, says that MBA supports the creation of a new regulator for non-depository independent mortgage banks and mortgage brokers, funded by the mortgage industry. And that MBA will work with policymakers “on the idea that all participants in the mortgage origination process should have a financial interest in making sure a borrower has a sustainable mortgage payment, without putting certain business models at a competitive at disadvantage.” At press time, MHN is still working to obtain from multi-housing groups their thoughts on the financial regulatory reform proposals. Stay tuned.