Issue

Even before the Dodd-Frank Act was enacted, community banks across the country were struggling to keep up with ever-increasing regulatory compliance and examiner demands. The Dodd-Frank Act -- despite being aimed at Wall Street -- promises to heap thousands more pages of rules on traditional banks, causing many to wonder if they can remain in business.

Community banks are particularly vulnerable to increased regulatory costs. The median-sized bank in the U.S. has about $154 million in loans and other assets, 37 employees, and is forced to comply with 1,700 pages of consumer regulations.

Without quick and bold action to relieve regulatory burden, as many as a thousand community banks could disappear, and their communities will be the poorer for it.

Position Statement

ABA is spearheading efforts to relieve banks' burden while maintaining good regulations that ensure the soundness of the banking industry and the safety of bank customers. There are many rules that are outdated, confusing for customers or simply counterproductive, detracting from bank lending rather than supporting it. ABA will work to remedy these rules so that banks can be freed from the regulatory straitjacket that is impeding their ability to lend and contribute to economic growth.

Recent Developments

ABA is aggressively highlighting the perils of overregulation in testimony, letters to regulators, comment letters and in media interviews. ABA President and CEO Frank Keating wrote an op-ed for the Wall Street Journal on Aug. 30, 2011 that called for smarter, more effective regulations. Keating also identified specific regulatory burdens and proposed remedies in letters to President Obama and the leaders of eight regulatory agencies with jurisdiction over banks. The letters were in response to a regulatory relief initiative announced by the president. 

In November 2011, the Government Accountability Office (GAO) issued a report studying the effectiveness of federal financial regulators regarding the issuance of Dodd-Frank Act related regulation. Currently, these independent agencies are not subject to the same requirements as other Federal agencies when it comes to directives to conduct in depth benefit-costs analyses prior to issuing rules. GAO concluded that the agencies could do better and made four recommendations to improve the rule writing process. 

• Agencies should take steps to incorporate the Office of Management and Budget's (OMB) regulatory analysis guidance more fully into their rulemaking policies;
• The Financial Stability Oversight Council (FSOC) should work with the agencies to establish formal coordination policies addressing issues including when coordination is needed, the process to solicit and address comments, and the FSOC's role in this process;
• Agencies should develop plans that determine how they will measure the impact of DFA regulations in retroactive reviews; and
• FSOC should direct the Office of Financial Research (OFR) to work with the agencies to identify and collect the data necessary to measure the impact of DFA regulations on the stability, efficiency, and competitiveness of the U.S. markets.

ABA is following efforts to streamline consumer protection regulations and participating in Bureau outreach to include more small business and community bank input when implementing Dodd-Frank powers or exercising rule-making authority in connection with Federal consumer financial protection laws.

Contact for further information: Rich Riese (202) 663-5051