A recent Dodd-Frank prompted study examining the implications of removing the exemptions of certain mortgage lenders and other firms from the Bank Holding Company Act found that it could result in divestitures by holding companies, but the overall impact on the mortgage and other credit markets would be relatively small.
“While many officials from the exempt institutions owned by commercial holding companies said that the institutions would be divested, data suggest that removing the exemptions would likely have a limited impact on the overall credit market given the overall market share of exempt institutions is small,” the Government Accountability Office said in a summary of the report.
“Views varied on how removing the exemptions would improve safety and soundness and financial stability,” the GAO said. “Some officials from exempt institutions said that financial stability could be adversely affected by further concentrating market share. Federal Reserve officials noted that institutions that remain exempt are not subject to consolidated supervision but could grow large enough to pose significant risks to the financial system, an issue they plan to continue to watch.”
