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Debt Relief Watch June 16, 2017
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Treasury Report: Overhaul of Financial Regulations

Washington, D.C. – A report discussing the department’s evaluation of the market has been divulged by the U.S. Treasury Secretary Steven Mnuchin. The report contains ostensible executive actions and changes to regulation that can produce vital relief. Moreover, the report suggests bringing private mortgage investor capital into secondary markets.

Since President Trump’s proposal to overhaul financial regulations, Secretary Mnuchin and other officials from the Treasury department have been meeting with major participants, from the financial world, including regulators, analysts, investors and other relevant figures. Through this process, the Treasury has produced the 150-pages aforementioned report, which delineates the financial system’s complication that needs urgent reform in order to stimulate the economy and allow more access to capital.

Overhaul of CFPB

The report, titled “A Financial System That Creates Economic Opportunities – Banks and Credit Unions”, also includes a revamping of the Consumer Financial Protection Bureau (CFPB). According to the report, CFPB is sought to have “substantive authority [that] is unduly broad, ill-defined, and susceptible to abuse.”

The report objurgates CFPB saying: “Dodd-Frank vests significant power in the CFPB, with few of the traditional checks and balances necessary to restrain regulatory abuses and arbitrary decision-making. The CFPB is led by a single Director who wields unilateral authority to enforce 18 enumerated federal consumer financial laws affecting major consumer decisions—from buying a home to paying for college. Despite this power, the unelected Director does not answer to the President or Congress in any meaningful sense.”

Further suggestions of CFPB’s overhaul include notifying regulated entities about CFPB’s interpretation of the law before CFPB enforces them, removing currently existing superfluous authority, and expanding retrospective regulatory review.

Residential Mortgage Lending Market

According to the report, “present conditions of continued tight mortgage lending in the private sector warrant a careful study of regulations and the extent to which they may be holding back the supply of mortgage credit.” The Treasury found several things – the revised regulations makes loan channeling through federal insurance more favorable than mortgage credit risks through private capital,  requirements rebuff qualified people access to mortgage through strict regulation, and financial liquidity with certain regulations hindered lenders focused on origination.

What Can We Expect Next

There exist a partisan split regarding support of the report’s recommendations. Likewise, some financial groups are also divulging their opinions – both, for and against. Consumer Bankers Association’s Richard Hunt, a proponent of the recommendations, says “The Treasury Department’s report is an important first step in recognizing how a duplicative and onerous regulatory environment harms banks, the economy, and, more importantly, consumers … It is imperative to right-size regulation to better promote the strengths of the banking industry, which contribute to economic growth, access to credit, and consumer choice.”

The report is one of the first of potential prospective ones that evaluates the financial regulatory system. However, this first one delineates what the Trump administration and the Treasury can implement in the long run.

Treasury Report: httpss://www.treasury.gov/press-center/press-releases/Documents/A%20Financial%20System.pdf

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