Though the Dodd-Frank Act was intended to curb the abuses and bad behavior of Wall Street megabanks, the legislation has had some unintended consequences, including the closing of the Missouri-based Shelter Financial Bank in September.
Last year, Shelter Insurance announced the closing of Shelter Financial, a lender it had managed for more than 13 years, The Wall Street Journal reports.
“The bank’s closing was entirely due to new regulations to do with Dodd-Frank,” Ron Wheeling, the former president and CEO of Shelter Financial, said, according to The Wall Street Journal. “The shame of it really is that we were a really well-run, very well-capitalized, very efficient small bank…Dodd-Frank didn’t intend to target anyone like us.”
Wheeling said that Dodd-Frank requires the bank to provide regulators with two different sets of financial statements based on different accounting methods, which would have added $1 million to the company’s expenses. The bank only had one branch and $200 million in assets.
“It was going to cost more than what we got out of the bank,” Joe Moseley, the vice president for public affairs at Shelter Insurance, said, The Wall Street Journal reports.
Shelter agreed to sell $26 million in deposits and $16 million in loans to Central Bancompany, though the firm will continue to service $137 million in loans and pay off the bank’s remaining depositors.