Does CFPB Oversight Crimp Credit?

72 Pages Posted: 14 Jul 2021 Last revised: 23 Sep 2021

See all articles by Andreas Fuster

Andreas Fuster

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

James I. Vickery

Federal Reserve Bank of Philadelphia

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper

Date Written: February, 2020

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: G21, G28, D18

Suggested Citation

Fuster, Andreas and Vickery, James Ian and Plosser, Matthew C., Does CFPB Oversight Crimp Credit? (February, 2020). FRB of Philadelphia Working Paper No. 21-8, Available at SSRN: https://ssrn.com/abstract=3884263 or http://dx.doi.org/10.21799/frbp.wp.2021.08

Andreas Fuster (Contact Author)

Ecole 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

James Ian Vickery

Federal Reserve Bank of Philadelphia ( email )

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

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

Matthew C. Plosser

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

33 Liberty Street
New York, NY 10045
United States

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