Regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability-to-repay rule the CFPB finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said yesterday at a Senate Banking Committee hearing on bank oversight and Dodd-Frank Act implementation.
Regulators should be careful to ensure that different rules do not “constrict credit to middle and lower-middle class people, who might be priced out of the housing market,” Tarullo explained. “So I think it’s definitely the case that on the table should be consideration of making QRM more or less congruent with QM.”
Tarullo also told senators that they should expect “a good bit of change” in the final regulations implementing the Volcker Rule and Basel III. Both proposals have been criticized for being too complex, and Tarullo said regulators are taking that into consideration.
Read witnesses’ testimony.