Trump's 'Big Number' On Dodd-FrankIssue 02-13-17 |
You may soon hear a cheer, as Dodd-Frank is in the cross hairs of regulatory reform. This set of rules was sold as a way to curtail bad habits by big banks, especially those with over $10 billion in assets. The reality is that even the smallest banks are now burdened with excessive and costly regulations that drive up the cost of doing business, and in many cases drive off even the most credit-worthy customers. Banks must stratify their loans by risk class, maintain extensive controls, and carry large amounts of (costly) equity, whether they engage in risky practices or not.
Ask a banker and you will likely get an unvarnished, uncharacteristically negative diatribe on evils of Dodd-Frank. Some of the regulations make sense, given that the FDIC (Federal Deposit Insurance Corporation) guarantees depositors a return of their money. Depositors rarely study their banks financial institutions so some oversight is in order. But, not all banks are the same, yet they seem to be treated that way be regulations. This cost is proportionately larger for small companies.
One parting thought for the accounting student; much of the Dodd-Frank compliance work goes to the accountants! As Dodd-Frank goes, so goes some of the accounting employment opportunities.