That's a fair argument.QM/ATR severely limits a bank's ability to make a 1-4 family first mortgage loan to consumers. So as time goes on, credit will be more and more scarce, and you will see cries of "we can't get a home loan anymore from our bank/credit union", and the small banks and credit unions will look like the bad guys.
From good ol' Wikipedia:There is a very little percentage of Americans who are too dumb to make smart decisions, so Warren, believing that all Americans are too dumb to make smart decisions, have put processes in place in the banks that make it so that there are guidelines to determine what is a good loan versus what is a bad loan. Most Americans didn't get themselves into trouble with overextension and signing contracts for loans they had no chance of repaying.
The U.S. subprime mortgage crisis was a nationwide banking emergency that triggered the recession of 2008, through subprime mortgage delinquencies and foreclosures, resulting in the devaluation of the attendant securities.
These mortgage-backed securities (MBS) and collateralized debt obligations (CDO) initially offered attractive rates of return due to the higher interest rates on the mortgages; however, the lower credit quality ultimately caused massive defaults. While elements of the crisis first became more visible during 2007, several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.Let me know if I lose you.So to reduce everyone down to the lowest, dumbest denominator is what Warren has done, and because the regulatory burden is simply too cumbersome and too expensive for most of the 6800 or so small banks, they will likely go out of the residential lending business altogether, will become easy prey for large banks, or will have to pay enormous fines for not following the CFPB system. Credit will dry up, and homebuyers will suffer.
Sen. Elizabeth Warren: A Warrior for Small Community Banks and Credit Unions | Occupy Democrats
...Community banks represent roughly 95% of all banking organizations, as of 2011. However, they only represent approximately 14% of banking assets in America. at the same time, community banks hold 46% of all small loans to businesses, according to a study done by Federal Deposit Insurance Corp. (FDIC).
Senator Warren has been a supporter of community banks and credit unions since the 1990s. “A rule that can be facially neutral can end up slamming community banks, and that’s part of what I worry about,” Warren said in an interview, adding that her interest in small banks dates to the 1990s. “I became increasingly concerned about the business model of the largest financial institutions — too many of them built their profit model around tricking their customers. Community banks didn’t do that. So right from the beginning I saw the key differences among their practices.”
...“On my first day of work helping set up the new consumer agency, I met with community bankers from Oklahoma. We talked about a lot of things — three of us had gone to the same high school, and many of their banks were located in towns where I still have family. But the most engaging part of our conversation was about how the new Consumer Financial Protection Bureau could become a strong partner with community banks.
...One Ohio banker forcefully explained that his bank didn’t believe in pricing tricks, but that he had to compete with lenders who do — and who sell products that often appear to be cheaper. From his perspective, real competition in the credit market is less about who makes the best product and more about who can hide costs from the customer until it is too late.
For more than a decade, the number of small banks has shrunk. Consolidation has thinned their ranks, and some have failed outright. The result is less diversity — fewer firms and fewer differences in the approaches used in the financial services sector.
The bankers I have talked with are not looking to Washington to solve their problems. But they are looking for a market that allows them to compete. They are looking for a regulatory structure that doesn’t require an army of lawyers, and a level playing field that lets customers see the true cost of a product — so lenders do not need to compete against a phantom price.
Whew! Thanks for making me research this more, tres borrachos. Now I can promote Warren like a boss.Supporting community banks and credit unions over larger institutions is a way to send a message that you side with small businesses. And it is helping to positively shape the view of Senator Warren in the banking industry, Massachusetts, and across the country.
According to Brian Gardner, an analyst with Keefe, Bruyette & Woods, “It’s a way for her to rebut the argument that she’s anti-banking industry, because her retort is, ‘no, I’m not anti-banking, I’m pro-small business,’ and that’s a very smart place to be politically.”
Further, the leaders in the community banks and credit unions have a very positive attitude towards Senator Warren.
Regulating banks is ultimately about what's good for the economy.By the way - you keep mentioning economics. I'm not an economist. This is about banking regulations, not the economy.