Financial reform and mortgage lending by systemically important financial institutions

Timothy Bianco, Gary Cornwall and Beau Sauley

Economics Letters, 2025, vol. 256, issue C

Abstract: We use proprietary transaction-level data from Intercontinental Exchange to examine how the Dodd–Frank Wall Street Reform and Consumer Protection Act (DFA) affected mortgage risk-taking by the six largest US financial institutions (SIFIs). Following DFA, these banks originated fewer mortgages, with lower average loan-to-value (LTV) ratios, and fewer high-LTV mortgages compared to other lenders. Our findings suggest that DFA curtailed risk taking among SIFIs but coincided with increased high-LTV lending by non-SIFIs, indicating a redistribution of risk to less regulated institutions. We provide the first transaction-level evidence linking DFA to measurable shifts in mortgage risk.

Keywords: Dodd–Frank act; Financial regulation; Mortgage lending; Systemically important financial institutions (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004707

DOI: 10.1016/j.econlet.2025.112633

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