morris plan " banks, which made loans based on savings plans by borrowers, and the first credit unions, accessible exclusively to consumers with a common place of employment, soon followed. by the 1930s, a wide array of lenders served consumers, including credit unions, small local savings banks, and a nationwide network of state - licensed consumer finance companies. savings and loans were created, in large part, because commercial banks and other local lenders would not make home mortgage loans. hundreds of sales finance companies were formed to help manufacturers and retailers provide credit to their customers. although commercial banks continued to finance merchants, manufacturers, and farmers, they were forced to turn more to consumer lending during the depression, when their primary business sharply contracted. as these structural changes continued, market demand and growing competition among this wider variety of lenders spawned further innovation. as early as 1900, some hotels began offering credit cards to their regular customers. by 1914, gasoline companies and large retail department stores were also issuing credit cards to their most - valued patrons. these first cards were simply a convenient way for good customers to run a tab with a particular retail business concern, since balances had to be paid in full each month. later versions, introduced by retail giants sears roebuck and montgomery ward, allowed customers to pay their bills in installments, with interest charged on unpaid outstanding balances. this shift to revolving credit, and another innovation - allowing one card to be used at multiple businesses - later generated increasing competition in the card industry. in the 1950s, commercial banks entered into the credit card business. home mortgage loans, as we know them today, are a fairly recent product born of the failures of the mortgage finance system during the great depression. clearly, radical change was needed. one of the most significant responses to this need was creation of the federal housing administration, which instituted a new type of mortgage loan - the long - term, fixed - rate, self - amortizing mortgage - which became the model that transformed conventional home mortgage lending. a whole industry - thrift institutions - grew up around this one product. the development of a broad - based secondary market for mortgage loans also greatly expanded consumer access to credit. by reducing the risk of making long - term, fixed - rate loans and ensuring liquidity for mortgage lenders, the secondary market helped stimulate widespread competition in the mortgage business. the mortgage - backed security helped create a national and even an international market for mortgages, and market support for a wider variety of

- term solution for many borrowers. fortunately, the housing market as a whole is a bright spot for the economy. higher home prices are improving the balance sheets of many households, even those that may face income and employment challenges, and new construction activity is generating new job opportunities. while affordability remains an important consideration, it is encouraging that housing has performed well in response to low interest rates. mortgage regulations and access to mortgage credit however, even during this period of strong performance in the housing market, access to affordable mortgage credit remains a barrier to homeownership for some borrowers, due in part to regulatory burden. since the last financial crisis more than a decade ago, there have been a number of new mortgage regulations that added requirements for both borrowers and lenders. 1 / 2 bis central bankers'speeches while many of these requirements have contributed to a safer and more consumer - friendly mortgage market, they have also introduced significant paperwork and delays that can present roadblocks for many borrowers. these new rules have also made it more difficult and costly for small banks to originate mortgage loans, leading many community banks to scale back on home lending activity or abandon it altogether. homeownership is as important to communities as it is to individuals, and access to credit for rural and low - to - moderate income communities often depends on community banks. in many communities, especially rural communities, if the local bank has been forced out of mortgage lending due to burdensome regulation, it means little or no access to mortgage credit, preventing buyers from financing home purchases and homeowners from selling their homes. many leaders of small community banks have told me that the compliance costs for originating smaller mortgages are prohibitive, and that the staffing and training required to meet the strict requirements are extraordinary in relation to the limited number of mortgages they originate. as one state banking commissioner said to me recently, “ it doesn ’ t make a lot of sense that you can make an $ 80, 000 truck loan on two sides of a sheet of paper, but that many, many pages of paperwork are required to make a $ 40, 000 loan on a mobile home or trailer. " in fact, i have been told by community bankers that they are sometimes compelled to make loans for lower - priced home purchases that are backed by other collateral, such as a car or equipment, because of the excessive burden of complying with the many residential home mortgage regulations and time frames for such small transactions. as a result