Bank Regulatory Burden Evaluation Tool

Bankers must spend too much time and commit too many resources to regulatory compliance, leaving too little time and resources for providing actual bank services. Much of the effort does not support bank soundness and has little or no benefit to customers or investors.

Every banker knows that compliance with the growing set of regulations, as well as adjusting to changes in regulations, takes hours out of the business day and has become a major expense. Many bankers have asked for a means to measure the growing regulatory compliance burden. They feel that valuing the time and cost would help with internal planning, and they would use the data to speak to their regulators and legislators.

Linked here is an evaluation tool to help bankers measure their regulatory compliance time and cost, and also instructions. Basically, the tool asks for estimates of representatives from central management, lending and deposit taking to input of the approximate hours spent on dealing with regulations and the hourly wages of the staffers who do the work. (You input data in the yellow spaces on the "Input" page, but note that you will leave most yellow spaces blank.) The input data is for one specific month and is identified by specific regulations. Once completed, the hours and wages for those hours are automatically totaled on the "Results" page to estimate the regulatory burden in that month, and the impact on profitability.

Please beware. As one bank CEO put it after checking the total, "That's a scary sum!"

The evaluation tool is provided as an Excel spreadsheet that automatically sums your estimates of time spent and wages paid. (You will want to download the tool and save it on your computer.) We did not provide the tool as a paper form, which could not calculate results.

ABA would also like to get a measure of banks' regulatory compliance costs. We have explained to federal regulators and legislators that the cost has become a major burden for all banks, so much so that it is impeding banks' ability to conduct business and serve their customers. We need hard data to prove our point. We would like to collect the estimates from as many banks as possible to compile an estimate of the regulatory burden for the entire banking industry. Therefore, we request that you e-mail your "Results" to rstrand@aba.com or fax them to 202-828-4547. Your data will be entered in our databank then destroyed; it will be kept strictly confidential.

Resources

Questions? For more information, contact Rob Strand.