Removing Barriers Blog

GAO Publishes Study on Dodd-Frank Regulatory Burden
Posted January 04, 2016 by CUNA Advocacy

Last week, the U.S. Government Accountability Office (GAO) published a study entitled “Dodd-Frank Regulations: Impacts on Community Banks, Credit Unions and Systemically Important Institutions,” which took a look at the new regulatory burdens put in place by the law.

This investigative arm of the U.S. Congress has found suggestions of "moderate to minimal initial reductions in the availability of credit" among those responding to various surveys on the subject. GAO found that the financial institutions it interviewed cited an increase in compliance burden associated with these rules. This included increases in staff, training, and time allocation for regulatory compliance and updates to compliance systems. Some of these industry officials also reported 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.

During the regulatory implementation of the law, we at CUNA have consistently warned of the serious costs to credit unions and consumers from the hundreds of rules emanating from the 2,300-page Dodd-Frank act. This is a message we have delivered as testimony in congressional hearings, letters to and meetings with members of Congress, and meetings with and letters to government agency officials and their staffs--both before and since the act was signed into law in 2010.

The GAO noted that it used information from CUNA in the report, and also acknowledged that its findings so far are early and many regulatory changes were not in effect at the time of its research.

The data omission would include the recent Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure (TRID) rule, which went into effect for closed-end residential mortgages only on Oct. 3. It also excludes any data on the new Home Mortgage Disclosure Act (HMDA) rule for which reporting does not commence until Jan. 1, 2018. 

A one-page summary of the report is available here, and the full report is available here.