WASHINGTON–President-elect Donald Trump has indicated he has changes planned for the Dodd-Frank Act, the massive piece of legislation passed in the wake of the financial crisis that among other things created the CFPB.
In an interview with the Wall Street Journal, Trump said of Dodd-Frank, “Dodd-Frank: We have to get rid of it or make it smaller.”
In addition to the CFPB, the Journal noted that Dodd-Frank has led to a number of safeguards for mortgages, including requirements for lenders to make sure borrowers can afford mortgages they sign up for, and a reduction in offerings of mortgages with balloon payments and with little verification of applicants’ income or assets.
“A looser lending environment would result in conflicting developments: More borrowers would get approved, while raising the risk of more foreclosures to come,” the Journal said. “Analysts say most lenders would be unlikely to return to practices and products that burned them during the housing crash.”
But the Journal also noted that new regulations have made lenders more risk averse and that banks have increasingly targeted only the most creditworthy borrowers or those taking out jumbo loans—mortgages that exceed $417,000 in most parts of the country.
Another factor that will impact financial regulation: the appointment of a new attorney general and the approach that will be taken by the Justice Department toward lending transgressions, the Journal noted.