At the end of the second quarter of the year the industry experienced an interesting anomaly: loan sales activity spiked to levels more typical of a busy fourth quarter. Several specific factors contributed to this increase in activity including the uncertainty surrounding the upcoming US presidential election, the continued global economic turmoil and the impact of regulatory changes in the financial industry.

Historically speaking, presidential elections traditionally lead to economic uncertainty, and 2012 is no different. In May, earnings estimates were scaled back, as the November election prompted companies to reevaluate their outlooks. Much of the concern is centered on the so-called fiscal cliff—the possibility of an end to the tax cuts that originated during the presidency of George W. Bush, $1.2 trillion in automatic spending cuts and the need to raise the debt ceiling again, along with new funding for the national healthcare program. Even after the ballots have been cast in November, it is unlikely that the high level of uncertainty about how fiscal restraints might affect the US economy will dissipate.

Another major contributor to the market’s continued malaise is the European sovereign debt crisis, which has made it difficult or impossible for some countries in the Eurozone to refinance their government debt without the assistance of third parties. In Ireland, Spain and Italy, for example, private debts arising from a property bubble were transferred to sovereign debt as a result of banking system bailouts. In Greece, the poster-child of Europe’s troubles, unsustainable public sector wages and pension commitments drove incredible government debt. Finally, the structure of the Eurozone as one currency with different tax and public pension rules has also contributed to the crisis and curtailed the ability of European leaders to respond and agree.

Unfortunately, indicators point to a worsening in overseas market fundamentals with no light on the horizon. Eurozone manufacturing took another downturn in June and factories are preparing for further declines in production, according to several business surveys. Manufacturing in China also worsened in June with export orders, usually an indicator of global economic health and trade flows, posting their biggest decline since December 2011.

In addition to US and global economic concerns, the financial industry is also grappling with new regulatory changes in the form of the Dodd-Frank Act, which was shaped in response to the 2008 financial crisis and signed into law on July 21, 2010. The legislation created a collection of federal regulators and regulations that will substantially reconstruct the supervision, compliance and business models of US banks and non-bank financial companies.

While many of the new regulatory standards are focused on large banks, there is also legitimate worry that they will trickle down to regional and community banks and be internally taxing and costly. As a result, many previously unregulated institutions will need to grow accustomed to a new federal regulator. What the future may hold for the full implementation of Dodd-Frank and the timing of that implementation is unclear.

With a cloudy economic forecast, concerns over the ramifications of new financial regulations and the uncertainty over the outcome of the presidential elections, financial institutions will continue to experience trepidation about any near-term recovery and rising of property values. When analyzing current indicators we believe the loan sales momentum that looked like an anomaly during the first six months or year is actually a trend that will continue through the third and fourth quarters of 2012.

Bliss A. Morris is founder and CEO of First Financial Network and a member of the DAI editorial advisory board. She may be reached at [email protected]. The views expressed here are the author’s own.