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Report: Dodd-Frank Falls Harder on Community Banks

Posted on 5/22/2013

The Dodd-Frank Act is making it harder for small businesses and people in rural areas and small towns to access financial services, an American Enterprise Institute report found Tuesday. The report examined how community banks are faring under Dodd-Frank's provisions.

"Community banks were not responsible for the causes of the financial crisis determined by the authors of Dodd-Frank," the report said. Yet, it found, banks with under $10 billion in assets are bearing a significant regulatory burden, particularly from Consumer Financial Protection Bureau rulemaking, Basel III capital requirements and mortgage lending rules.

As a result of this burden, the report found, many small banks will see their profit margins fall and either close or merge. The report's authors argued that this will result in greater concentration of assets among large banks and inadequate service to "small businesses and individuals who do not fit neatly into standardized financial modeling, or who live outside of metropolitan areas served by larger banks."

"Neither of these outcomes will protect consumers, the financial system, or the recovery of the American economy," the report concluded.

To read the report visit: http://www.aba.com/Members/Economic/Documents/TheImpactofDodd-FrankonCommunityBanksAEI.pdf





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