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Financial reform and mortgage lending by systemically important financial institutions

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  • Bianco, Timothy
  • Cornwall, Gary
  • Sauley, Beau

Abstract

We use proprietary transaction-level data from Intercontinental Exchange to examine how the Dodd–Frank Wall Street Reform and Consumer Protection Act (DFA) affected mortgage risk-taking by the six largest US financial institutions (SIFIs). Following DFA, these banks originated fewer mortgages, with lower average loan-to-value (LTV) ratios, and fewer high-LTV mortgages compared to other lenders. Our findings suggest that DFA curtailed risk taking among SIFIs but coincided with increased high-LTV lending by non-SIFIs, indicating a redistribution of risk to less regulated institutions. We provide the first transaction-level evidence linking DFA to measurable shifts in mortgage risk.

Suggested Citation

  • Bianco, Timothy & Cornwall, Gary & Sauley, Beau, 2025. "Financial reform and mortgage lending by systemically important financial institutions," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004707
    DOI: 10.1016/j.econlet.2025.112633
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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