Regulatory reform

With policymakers focused on ending Fannie Mae and Freddie Mac’s conservatorship, their regulator is reorganizing key units and adding staff to position itself for the long term.

The regulator said the investment bank and financial services company will help in the process of strengthening Fannie Mae and Freddie Mac’s capital standing for their eventual exit from conservatorship.

Now that the Consumer Financial Protection Bureau says it will scrap an unpopular standard for so-called qualified mortgages, the big question is what will take its place.

In another rollback of the bank trading ban, the federal agencies unveiled a plan to allow financial institutions to invest in multiple companies through certain fund structures.

In the past, the agency cited the legal term in enforcement actions without stating what it meant, but Director Kathy Kraninger has sought to give the industry clearer guidance.

Regulators already finalized a rollback of the proprietary trading ban section of the rule but signaled then that their overhaul was not finished.

The agency is sending a strong message that it won’t rush to end an exemption for Fannie Mae and Freddie Mac while also signaling longer-term changes that will affect all lenders.

Director Kathy Kraninger has told lawmakers that the agency will delay the expiration of the so-called QM patch, now set for January 2021.

In another sign of state officials trying to outdo the Consumer Financial Protection Bureau, governors in California and New York want greater authority to license and oversee the debt collection industry.

Despite changes by the Federal Housing Administration, bankers remain reluctant to join the program for fear of legal liability. But that could change if it revamps servicing processes, experts say.