ABA on Monday expressed strong support for legislation (H.R. 4042) that would delay implementation of Basel III rules related to mortgage servicing assets until the rules’ impact can be studied and better alternatives explored.
“The Basel rules were designed primarily for large international banks, not for small and mid-size banks; applying these rules to smaller banks has a very different and more dramatic impact on an institution’s ability to conduct business,” ABA EVP James Ballentine said in a memo to the bill’s sponsors.
Ballentine noted that banks of all sizes are selling their MSA portfolios to non-bank entities, which often have no interest in developing long-term customer relationships and are outside the purview of federal banking regulators. ABA Chairman Jeff Plagge made similar observations in a letter Monday to members of the Financial Stability Oversight Council, which has flagged the growth of non-bank mortgage servicers as an emerging threat.
Read ABA’s memo.