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Unformatted text preview: he maximum rates that can be charged on mortgages and/or consumer loans and regulations
(now abolished) such as the Federal Reserve’s Regulation Q maximums on time and
savings deposit interest rates.
Such price and quantity restrictions may have justification on social welfare
grounds—especially if society has a preference for strong (and subsidized) housing
and farming sectors. However, they can also be harmful to FIs that have to bear the private costs of meeting many of these regulations. To the extent that the net private costs
of such restrictions are positive, they add to the costs and reduce the efficiency with
which FIs undertake intermediation. Consumer Protection Regulation www.ffiec.gov
www.occ.treas.gov Congress passed the Community Reinvestment Act (CRA) and the Home Mortgage
Disclosure Act (HMDA) to prevent discrimination in lending. For example, since
1975, the HMDA has assisted the public in determining whether banks and other
mortgage-lending institutions are meeting the needs of their local communities.
HMDA is especially concerned about discrimi...
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- Spring '09