President Obama Wednesday morning signed the Dodd-Frank Wall Street Reform bill, which will transform the regulation of financial services and the mortgage industry over the next three years as new rules are issued and implemented.
"This reform will help foster innovation, not hamper it," the President said during the bill signing ceremony. "It is designed to make sure that everyone follows the same set of rules, so that firms compete on price and quality, not tricks and traps."
But the American Bankers Association warned the legislation "contains a tsunami of new rules and restrictions for traditional banks that had nothing to do with causing the financial crisis in the first place." ABA president and chief executive Edward Yingling said it will lead to "over 5,000 pages of new regulations on traditional banks and years of uncertainty as to what the massive new rules will mean."
ABA, over the past nine months, opposed the legislation as it worked its way through the House and Senate.
Quicken Loans CEO of Bill Emerson said some regulation is needed because "things got out of hand" but noted that in trying to fix the mortgage industry, new regulations should not lead to consolidation of all mortgage risk into five or six large banks.
"The largest five banks do not have the balance sheets necessary to support this housing market and I know they don't want to," Emerson said at a U.S. Chamber of Commerce forum. He noted financial reform will lead to fewer players, but also offers opportunities for the survivors.
The Quicken CEO expects the legislation will make it more difficult to qualify borrowers for a mortgage, while making it more expensive for the lending industry to conduct business, he told reporters.
But he likes the fact that the Consumer Financial Protection Bureau will consolidate rulemaking for most of the mortgage regulations (RESPA, TILA and others) under the bureau's roof.
"Fortunately, the regulators understand the business," the Quicken CEO said. He noted that it is too early to tell what will come out of the rulemaking process. "It may not be as bad as we think," he added.
