| When Congress began tackling financial reform, the overhaul quickly became labeled as "historic" and "sweeping," with attention deservedly focused on regulating derivatives, winding down large financial institutions, and creating the new Consumer Financial Protection Bureau to regulate mortgages and other financial products. But lost in the torrent of news coverage was a significant move to change the way key information on borrowers and mortgage loans is collected and made public. Those changes, to the Home Mortgage Disclosure Act (HMDA) represent a benchmark in the long fight against lending discrimination. They could become an invaluable tool for consumer activists, regulators, and researchers trying to identify egregious lenders and their loans. They could transform the predatory-lending debate from arguments over anecdotes to conclusions based on hard evidence.
Or maybe not.
In the crucial rule-making to follow final passage of a financial-reform bill, the HMDA changes could also potentially get lost in the weeds, watered down by industry lobbyists and made public in a format that's difficult to access and hard to use. The new Consumer Financial Protection Bureau could end up owning another problem it doesn't have the tools to fix. Like so much in the reform bill, the proposals to transform HMDA data raise important issues, without fully resolving them.
"The industry is very nervous about making detailed information on loans and borrowers available," says Kathleen Engel, a financial-services law professor at Suffolk University in Massachusetts. "It will take a lot of time to get these rules right, and there will be tremendous industry pushback. They're going to try to make it as difficult as possible to detect wrongdoing."