Academic journal article ABA Banking Journal

Regulation Tailored to Fit Our Industry

Academic journal article ABA Banking Journal

Regulation Tailored to Fit Our Industry

Article excerpt

Every banker knows what the Dodd-Frank Act has done to their bank. You know how many employees you added to address compliance issues, and how many you diverted from selling and servicing. You've seen the frustrations that Dodd-Frank has caused for your employees in trying to deal with over 11,000 pages of new rules and regulations.

Now we have survey data from academic researchers that show what Dodd-Frank has done to a major sector of our industry.

These data provide an impetus to move toward a new model of regulation--one tailored to fit our diverse industry. They come from the Mercatus Center at George Mason University in Northern Virginia, which studied the impact of Dodd-Frank on 200 banks with under $10 billion in assets. This is what the center learned:

* 83% of survey respondents saw compliance costs increase by more than 5% since 2010, the year Dodd-Frank became law.

* More than 70% added at least one full-time employee. And over 20% added two employees.

* 71% said business activities have been altered due to CFPB action.

The results, the study reported, were "substantially increased compliance costs" due to new hiring, greater use of consultants, and "more time spent by noncompliance employees on compliance." The impact of Dodd-Frank is also leading small banks to reconsider products and services they offer, including residential mortgages and overdraft protection.

We can't make Dodd-Frank disappear. But we can ask our representatives in Congress to understand the impact of regulation that is headed the wrong way. A thousand determined participants worked toward that goal during the ABA Government Relations Summit in Washington last month when they visited their members of the House and Senate. …

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