Banking pro: Brokers a 'shadow industry,' not well regulated

by Ryan Smith12 Aug 2014
The head of a banking industry group is drawing fire from mortgage pros for comparing mortgage brokers to payday lenders and claiming that the brokerage industry is barely regulated.

On the Fox News show Sunday Morning Futures, Florida Bankers Association President and CEO Alex Sanchez claimed that regulation was driving smaller lender out of business, while capital that should be going to banks was ending up in the “shadow banking industry.”

“One of the concerns that we have is that the (Wall Street) Journal reported in March that $31 trillion has moved from the FDIC banking world, which is very regulated, to the non-regulated shadow banking industry,” Sanchez said. “That’s bad news for Americans. These are payday lenders, these are mortgage brokers. No one’s really basically regulating these folks, and when Americans have to go to these types of financial providers, that’s bad news.”

In point of fact, mortgage brokers took the brunt of the new regulations under Dodd-Frank, laboring under compensation restrictions and disclosure rules that do not apply to banks or other lenders.

Thanks to Marc Savitt of the National Association of Independent Housing Professionals for bringing our attention to this story.

What do you think? Was Sanchez out of line? Let us know in the comments below.
 

COMMENTS

  • by B. | 8/12/2014 9:31:17 AM

    I thinks a sad attempt for the banks to try and regain market share. Brokers have always been regulated by the states in which they do business. As already stated, brokers took the brunt of regulation hit from Dodd Frank. Borrower's go to brokers for their ease of access, as well as their ability to offer the main mortgage products at a better price or rate.

  • by | 8/12/2014 9:36:19 AM

    He should be fired. He was trying to bring business back to the banks.
    The mortgage brokerage industry is heavily regulated.
    The head of the mortgages brokers association should try to go on air with the same show to set the facts straight.
    This guy does not know what he is talking about!

  • by MIKE | 8/12/2014 9:37:32 AM

    Very misguided Mr Sanchez!! We have to disclose every nickle we make, can't even lower our fee to compete where Mr. Sanchez can bank 6 points on a FHA mortgage where Brokers share the 6 points with the consumer, I see it EVERY single day. Nice try Mr. Sanchez

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