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Does CFPB oversight crimp credit?

Author

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  • Andreas Fuster
  • Matthew Plosser
  • James Vickery

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.

Suggested Citation

  • Andreas Fuster & Matthew Plosser & James Vickery, 2018. "Does CFPB oversight crimp credit?," Staff Reports 857, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:857
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    References listed on IDEAS

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    4. Anthony A Defusco & Stephanie Johnson & John Mondragon, 2020. "Regulating Household Leverage," Review of Economic Studies, Oxford University Press, vol. 87(2), pages 914-958.
    5. Buchak, Greg & Matvos, Gregor & Piskorski, Tomasz & Seru, Amit, 2018. "Fintech, regulatory arbitrage, and the rise of shadow banks," Journal of Financial Economics, Elsevier, vol. 130(3), pages 453-483.
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    Cited by:

    1. Richard K. Crump & Joao A. C. Santos, 2018. "Review of New York Fed studies on the effects of post-crisis banking reforms," Economic Policy Review, Federal Reserve Bank of New York, issue 24-2, pages 71-90.

    More about this item

    Keywords

    Consumer Financial Protection Bureau; credit; mortgage; regulation;

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • 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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