Silver's faltering recovery last week not a good early sign

It is a pleasure to join you again this year for the American Bankers Association Community Bankers Conference. As a former community banker, I always enjoy taking time to learn from your experience to inform my work at the Federal Reserve.1 Today, I would like to discuss a concerning trend in our financial system that has significant implications for the banking industry, the stability of the mortgage market, and consumers. Whether due to a conscious decision in response to the regulatory environment or other factors, we have seen a significant migration of mortgage origination and servicing out of the banking sector. The data tells a clear story. In 2008, banks originated around 60 percent of mortgages and held the servicing rights on about 95 percent of mortgage balances. Since that time, the contraction has been extraordinary. As of 2023, banks originated only 35 percent of mortgages and serviced about 45 percent of mortgage balances.2 Taking a step back to understand the magnitude of this change, as regulators, we have a responsibility to determine whether prudential regulations have driven this shift. We should also consider whether the regulations are appropriately calibrated to the risk that mortgage origination and servicing pose to the banking system. This out-migration of origination and servicing has been costly for banks, consumers, and the overall mortgage system. In part, this results from over calibration of the capital treatment for these activities, resulting in requirements that are both disproportionate to risk and that make mortgage activities too costly for banks to engage. I see a path forward that incorporates both renewed bank participation in the mortgage market and a safe and sound banking system. FED VICE CHAIR FOR SUPERVISION MICHELLE BOWMAN: US BANKS TO SEE NEW MORTGAGE CAPITAL REQUIREMENTS IN BASEL PLAN