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GAO Report Studies Dodd-Frank Regulations’ Impact on Financial Institutions
On Wednesday, December 30, 2015, the Government Accountability Office (GAO) released the report: “Dodd-Frank Regulations: Impacts on Community Banks, Credit Unions and Systemically Important Institutions.” In terms of Systemically Important Institutions (SIFIs), GAO concluded “indicators suggest large bank SIFIs have become larger but less vulnerable to financial distress since the Dodd-Frank Act” and generally found improvements in the size, complexity, interconnectedness, liquidity, and leverage of these large institutions, as seen on the charts on pg. 55-56.
Notably, the report also indicated:
- The institutions interviewed cited an increase in compliance burden associated with Dodd-Frank rules, including 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; and
- There have been moderate to minimal initial reductions in the availability of credit; though these risks still may arise in the future.
The GAO advised, however, the “full impact of the Dodd-Frank Act remains uncertain because many of its rules have yet to be implemented and insufficient time has passed to evaluate others.”