The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) includes a provision for the U.S. Government Accountability Office (GAO) to annually study these regulations. The GOA released its report last Wednesday.

One of the items the report examined was the possible impact of selected Dodd-Frank Act provisions and related rules on community banks and credit unions. Although the Dodd-Frank Act exempts small institutions, such as community banks and certain credit unions, from several of its provisions, and authorizes regulators to provide small institutions with relief from certain regulations, it also contains provisions that impose additional restrictions and compliance costs on these institutions.

Highlights of the study’s findings include:

  • An increase in compliance burden associated with the rules, i.e. increases in staff, training, and time allocation for regulatory compliance and updates to compliance systems.
  • A decline in specific business activities, such as loans that are not qualified mortgages, due to fear of litigation or not being able to sell those loans to secondary markets.
  • Moderate to minimal initial reductions in the availability of credit among those responding to the various surveys and regulatory data to date have not confirmed a negative impact on mortgage lending.

The full impact of the Dodd-Frank Act remains uncertain because many of its rules have yet to be implemented and insufficient time has passed to evaluate others.

Read the 150-page report to see the full impact of the Dodd-Frank regulations.