Does CFPB Oversight Crimp Credit?

80 Pages Posted: 20 Jun 2018 Last revised: 2 Aug 2023

See all articles by Andreas Fuster

Andreas Fuster

École Polytechnique Fédérale de Lausanne; Swiss Finance Institute; Centre for Economic Policy Research (CEPR)

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

James I. Vickery

Federal Reserve Bank of Philadelphia

Multiple version iconThere are 3 versions of this paper

Date Written: January 12, 2021

Abstract

We study how regulatory oversight by the Consumer Financial Protection Bureau (CFPB) affects mortgage credit supply and other aspects of bank behavior. We use a difference-in-differences approach exploiting changes in regulatory intensity and a size cutoff, below which banks are exempt from CFPB scrutiny. CFPB oversight leads to a reduction in lending in the Federal Housing Administration (FHA) market, which primarily serves riskier borrowers. However, it is also associated with a lower transition probability from moderate to serious delinquency, suggesting that tighter regulatory oversight may reduce foreclosures. Our results underscore the trade-off between protecting borrowers and maintaining access to credit.

Keywords: consumer financial protection, regulation, mortgages, servicing, credit supply

JEL Classification: D18, G21, G28

Suggested Citation

Fuster, Andreas and Plosser, Matthew C. and Vickery, James Ian, Does CFPB Oversight Crimp Credit? (January 12, 2021). FRB of New York Staff Report No. 857. Rev. July 2023., Available at SSRN: https://ssrn.com/abstract=3200020 or http://dx.doi.org/10.2139/ssrn.3200020

Andreas Fuster

École Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Chamberonne
Bâtiment Extranef
CH-1015 Lausanne
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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 Philadelphia ( email )

10 Independence Mall
Philadelphia, PA 19106
United States
+12155746549 (Phone)

HOME PAGE: http://www.vickeryjames.com

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