Berri deregulation plans would stimulate mortgage loans for banks
On Wednesday in the American Bankers Association (ABA) Top in Washington, DC, Bessent said that the financial policy has served “large institutions” at the expense of smaller, community -oriented banks.
“Not anymore,” said Bessent. “This administration wants to give all banks the opportunity to succeed – whether it is JP Morgan or your local mortgage and loan. It is intended to get capital for Americans who need it most by removing bureaucracy.”
Bessent praised the role of community banks in increasing access to the American financial system and said that “to ensure that Main Street is more important in bank regulations, I and the rest of the Treasury team will spend the necessary time and attention on the fairly technical, substantive aspects of the reform of the regulations.”
Specifically in the field of mortgages, Bessent was critical of the increasingly important role that independent mortgage banks (IMBs) play in the wider mortgage industry and say that their rise is risking a broader access to mortgage credit and risks reliable business pipes for smaller institutions for smaller institutions.
“When considering the effects of bank regulation on community banks, we must wonder why so many financial activities have moved from the regulated banking system,” he said. “For example, the shift from mortgage loans to non -banks has undermined an important industry for community banks.”
This shift, he said, is at least partially powered by regulations. In particular “due to outdated capital requirements for some exposures that are more than the last evidence about the actual risk of those exposures.”
Modernizing regulatory capital could reduce the risks for financial stability if it focuses on “leveling the playing field between banks and not -banks,” he said, while it also supports, improve, improve and improve their safety and solidity. “
He criticized the Basel III -end game proposal that was led by the Biden administration as “in my opinion not the right starting point for our modernization effort,” he said. “Important aspects of the end game standards cannot be explained or even understood because the Basel committee has offered little reason.”
Competing parity between banking and not -bank loan providers remains an open question, but it is a berry that said it is being actively tackled by Treasury and the White house.
“Modernization of regulatory capital would probably be a reduced capital requirements for mortgage loans and some other exposures that are the core of the Bank model community,” said Bessent. “Only large banks give the benefits of the reduced requirements for those exposures, as actually considered under the BIDEN administration, would anchor their already dominant position.”
Instead, a possible solution could be to “give any bank that is not obliged to subject to the modernized requirements, the option, at his own discretion, to register,” he said. “This is what I mean by ensuring that Main Street matters more.”
