Banks are spending more work hours on compliance than on lending because of the Dodd-Frank Act, according to the American Bankers Association.
Frank Keating, the president and CEO of the ABA, wrote an opinion piece in the Wall Street Journal describing the significant challenges for banks of all sizes in complying with provisions of the Dodd-Frank Act.
“Already federal regulators have issued 4,870 Federal Register pages of proposed or final rules affecting banks,” Keating wrote, according to the Wall Street Journal. “Many more are still to come – for a grand total of more than 240 rules. And that’s on top of about 50 new or expanded regulations unrelated to Dodd-Frank that banks have had to absorb over the past two years.”
Keating warned that additional regulations can have the opposite effect of their intentions and can slow economic growth and drive up prices.
A recent poll by the Tarrance Group showed that Americans recognize the danger of over-regulating and showed that six in 10 people polled said that consumers are most affected by the costs that federal regulations create.
Keating recommended that the government come up with a solution that reverses the trend of over-regulation and frees the private sector.
“We need an approach to regulation that will ensure fundamental protection of consumers, the environment and other concerns without bogging businesses down in red tape or chilling expansion with threats of additional rules and harsh penalties,” Keating wrote, the Wall Street Journal reports. “Bankers, for instance, need to know that they can exercise discretion and make a loan to a customer they know well without fear of reprisal from an overly cautious examiner.”