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Dodd-Frank will have significant impact on community banks
The Dodd-Frank Wall Street Reform Act will have a profound effect on financial institutions of all sizes. While certain aspects of the Act are limited to “big banks,” – institutions with greater than $10 billion in total assets – many of its provisions will significantly change the way community banks operate.
The Act’s creation of the Consumer Financial Protection Bureau is one of the most controversial components of the legislation. The Bureau will not directly regulate community banks but will require them to implement the agency’s rules.
The regulatory burden on community banks will likely have a negative impact on earnings. Many community banks are already experiencing an increase in compliance related costs. It will be critical for community banks to employ risk-based strategies that build a robust compliance program and control these increasing costs.