Does CFPB Oversight Crimp Credit?

47 Pages Posted: 20 Jun 2018 Last revised: 26 Jun 2018

See all articles by Andreas Fuster

Andreas Fuster

Swiss National Bank - Financial Stability

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

James I. Vickery

Federal Reserve Bank of New York

Date Written: June 1, 2018

Abstract

We study the effects of regulatory oversight by the Consumer Financial Protection Bureau (CFPB) on credit supply as well as bank risk-taking, growth, and operating costs. We use a difference-in-differences approach, making use of the fact that banks below a $10 billion size cutoff are exempt from CFPB supervision and enforcement activities. We find little evidence that CFPB oversight significantly reduces the overall volume of mortgage lending. However, we find some evidence of changes in the composition of lending—CFPB-supervised banks originated fewer loans to risky borrowers, offset by an increase in large “jumbo” mortgages. We find no clear evidence of substitution in lending between bank and nonbank subsidiaries, or effects on asset growth or bank noninterest expenses.

Keywords: consumer financial protection bureau, credit, mortgage, regulation

JEL Classification: D18, G21, G28

Suggested Citation

Fuster, Andreas and Plosser, Matthew C. and Vickery, James Ian, Does CFPB Oversight Crimp Credit? (June 1, 2018). FRB of New York Staff Report No. 857. Available at SSRN: https://ssrn.com/abstract=3200020 or http://dx.doi.org/10.2139/ssrn.3200020

Andreas Fuster

Swiss National Bank - Financial Stability ( email )

Boersenstrasse 15
Zurich, CH-8022
Switzerland

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

James Ian Vickery (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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