The Federal Reserve enforces these rules through oversight of the institutions it examines for compliance with consumer protection laws and regulations. The regulatory scheme for the mortgage industry has become extremely complex as the breadth and depth of this market has grown over the past decade and the role of nonbank mortgage lenders, particularly in the subprime market, has increased.
It also appears that the strong expansion of M3 should not adversely affect this outlook, as portfolio shifts have played a prominent role; in particular, the build up of liquidity should not translate into inflationary pressure as long as economic growth remains modest.