Does CFPB Oversight Crimp Credit?

RePEc Short ID: pfu92
ORCID iD: 0000-0002-4256-5005

Fuster, Andreas; Plosser, Matthew; Vickery, James

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Does CFPB Oversight Crimp Credit?

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: D18; G21; G28;