Academic journal article ABA Banking Journal

Dodd-Frank Drives Up Small-Bank Costs

Academic journal article ABA Banking Journal

Dodd-Frank Drives Up Small-Bank Costs

Article excerpt

A large majority of surveyed small banks have seen compliance costs rise since the passing of the Dodd-Frank Act, according to a new survey by George Mason University's Mercatus Center. Close to 83% of surveyed small banks reported an increase of more than 5%.

The survey covered about 200 banks with less than $10 billion in assets in 41 states based in small metro centers and rural markets.

As small banks grapple with new rules, they're adding compliance staff members. Since 2010, the median number of compliance officers doubled from one to two among participants. A majority (65%) said Dodd-Frank was more burdensome than the Bank Secrecy Act.

One big outcome of Dodd-Frank: the creation of the Consumer Financial Protection Bureau. Over 70% of banks polled said business activities were affected by CFPB--especially in mortgage regulations where close to 60% said changes to offerings were based on specific requirements, whereas under 30% said it was for business reasons. A majority said CFPB and new definitions of "qualified mortgage" and "qualified residential mortgage" had a significant negative impact on offerings and earnings. …

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