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Servicers - ABI

One of the nation’s top bank regulators says the banking system is safe, but worries about risks at non-bank financial institutions, particularly mortgage servicers, YahooFinance.com reported. The remarks from Federal Deposit Insurance Corp. Chair Jelena McWilliams come days after regulators freed the last “too big to fail” non-bank from extra regulation. McWilliams told a banking conference on Tuesday that post-crisis regulatory reform helped make the banking system safer but could have pushed risky activity to non-bank lenders. Those lenders, McWilliams feared, are not regulated by the FDIC or the other two banking regulators: the Federal Reserve and the Office of the Comptroller of the Currency. McWilliams’s comments come as she and the rest of the Financial Stability Oversight Council, a committee of financial regulators, unanimously voted to strip Prudential Financial of its “systemically important financial institution” title. In its report, the council said that the largest life insurer in the U.S. is no longer a risk to financial stability because it has more liquidity that it used to and lacks the exposure to be of concern. “It’s not Prudential that I’m concerned about,” she said. “It’s where are we putting this activity by regulating at the banks at the level that we have regulated it in the past.” McWilliams added that she sees a problem in the fact that eight out of the 10 largest mortgage servicers in the country are non-banks.

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