Moody’s Sees Benefits for Banks From Consumer Bureau

By BEN PROTESS
NYT

The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch, according to a new report by Moody’s Investors Service.

The bureau, Moody’s said, could be the “medicine” that tames the financial industry’s risk-taking ways. Over the long haul, safer lending practices “could limit future credit and litigation costs for the firms,” said Moody’s, one of the largest credit rating agencies.

The consumer bureau, which formally opened its doors last week, can write new rules for financial firms, examine their books and issue enforcement actions. A chief component of the Dodd-Frank financial regulatory law, the agency will focus on mortgages and credit cards, among other financial products.

“The stricter policing of consumer lending products and services will ultimately make banks safer by steering them away from riskier products such as subprime mortgages,” the report said.

(More here.)