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.
 

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