Issue of Interest: Dodd-Frank Act

ABA Media Contact: Jeff Sigmund
(202) 663-5439
Email: jsigmund@aba.com
Last updated: Sept. 7, 2017

Summary

The Dodd-Frank Wall Street Reform and Consumer Protection Act represents a dramatic rewrite of the rules governing financial service providers and products. Unprecedented in scope, the bill has ushered in a new era of regulation -- for good and ill.

While its core provisions provide needed reform, it is overloaded with new rules and restrictions on traditional banks that did not cause the financial crisis. Bankers face nearly 12,000 pages of new or expanded regulations as a result of the bill, with a complex implementation process that will likely take years.  Managing the tsunami of regulation is a significant challenge for any bank, but it’s overwhelming for community banks.  The weight of the new rules creates pressure to hire additional compliance staff instead of customer-facing staff, reducing resources that could be directly applied to serving a bank’s customers and community.  It means fewer loans get made, slower job growth and a weaker economy.

The Dodd-Frank Wall Street Reform and Consumer Protection Act does contain some key reform provisions that bankers have long supported, including creation of a new systemic regulatory body, a new process for ending the concept of too-big-to-fail, better consumer protections, and provisions designed to rein in the shadow banking system.

Updates related to the Dodd-Frank Act can be read on the ABA Banking Journal online.

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