“Getting ready for all of the increased scrutiny that we’re going to be coming under, we now have a formal compliance department,” Mike Head, the president and CEO of First Federal Savings said, according to the Evansville Courier & Press.
Before the increased Dodd-Frank pressure, First Federal Savings department managers were able to complete their compliance duties as well as other responsibilities. With the enactment of the 2010 Dodd-Frank Act, however, the bank took on full- and part-time employees that focus specifically on compliance.
Head explains that the increase in compliance officers translates to increased expenses for the bank, including employee salaries and training.
While these requirements may not be burdensome for larger institutions, small community banks will likely feel the weight of the increased number of regulations, Mark Schroeder, the chairman and CEO of the Indiana-based German American Bancorp said, the Evansville Courier & Press reports.
Schroeder added that he has heard rumors that some smaller banks are also worried that regulations intended only for larger banks will eventually come to affect community banks.
Greg Donaldson of Capital Management said that, over the course of the past six months, some of his clients have had difficulty obtaining bank loans in part due to tighter lending standards under Dodd-Frank.
“The impact [of Dodd-Frank] is mostly on the banks, but the banks are kind of like the heart of the economic system, and if you constrict the heart, it reaches the whole body,” Donaldson said, according to the Evansville Courier & Press.