by Edward B. Kramer, Executive VP, Regulatory Programs
There a significant consumer protection development that is impacting the mortgage banking subsidiaries of bank holding companies, according to an article in the July 21, 2009 edition of National Mortgage News.
The Federal Reserve Board is expanding its consumer protection role by performing targeted exams of mortgage banking subsidiaries of BHCs, according to Fed chairman Ben Bernanke. The Fed traditionally has taken a hands-off approach to the non-bank subsidiaries of BHCs, but last year it engaged in targeted exams with state banking regulators. “In looking at our responsibility to enforce consumer protection laws, we believe a somewhat more pro-active stance is justified,” Mr. Bernanke told a congressional panel Tuesday. He acknowledged that the Fed’s authority over the non-bank subsidiaries of BHCs is a “bit vague” and said it would be helpful if Congress clarified the Federal Reserve Board’s authority.
The Fed chief also made it clear that he does not like the Obama administration’s regulatory reform proposal to create a Consumer Financial Protection Agency, which would strip the Fed and the other federal banking regulators of their consumer protection role. He stressed that the Fed is committed to consumer protection and the board has done a “good job” in the past few years. “If you allow us to continue to work in this area we will be interested in doing so,” he told the House Financial Services Committee.
