Wolters Kluwer: More Regulatory Changes to Come

Automated compliance vendor Wolters Kluwer Financial Services notes that substantial regulatory changes have already been made, but lawmakers are in the process of debating additional legislation that would help protect consumers even more aggressively. Wolters Kluwer's compliance experts agree that development alone has already changed the mood within the financial services industry. "Regulators are feeling much more empowered than they were during the previous administration," said Edward Kramer, executive vice president for Regulatory Programs at Wolters Kluwer Financial Services. "More stringent regulatory exams, a rising number of enforcement actions and the growing number of financial institution closings during the first quarter of this year are evidence of that." Mr. Kramer said he believes the mortgage reform bill Congress debated last week could be the beginning of major financial services regulatory reform. The bill would fundamentally change the mortgage lending market, placing tighter restrictions on nonprime mortgage lending and lender compensation. Perhaps more importantly, it would require lenders establish what the bill calls a "duty of care" in proving borrowers could repay a loan or that refinancing gave them a net tangible benefit. "The proposed mortgage reform bill combined with numerous regulatory changes already scheduled to take effect this year could likely put financial institutions in a significant crunch," added Amy Downey, senior regulatory consultant at Wolters Kluwer Financial Services. "These changes are very different from those of previous years that required a simple update to a document or disclosure. Instead, they will require institutions to change the way they do business. Many institutions are just starting to figure this out and scrambling to adapt."