However, I think it would also be unfortunate if the laws and regulations put in place to require other lenders to adopt the same responsible practices long used by community banks are so complicated and expensive that they have the unintended effect of forcing some community banks to leave the market.
It is difficult to think about crafting a regulatory regime that is simplified for smaller lenders that retain 100 percent of the risk they take, but I think it is important to try. The Federal Reserve had to think through a lot of these issues as we drafted proposals for escrow requirements and the definition of qualified mortgages.