Question and Answer Session with PYA on the Impact of the Dodd-Frank Act on Community Banks

Question and Answer Session with PYA on the Impact of the Dodd-Frank Act on Community Banks

1) Will you provide a brief overview of the Dodd-Frank Act?

The Dodd-Frank Act is significant piece of legislation that\’s going to have a major impact from the banking industry as a whole. The act itself is really a framework that establishes several new bureaus, countless new studies to be performed and has multiple effective dates that extend well into the future.

2) Will Dodd-Frank Act only impact larger banks?

That is probably one of the largest misconceptions today about the Dodd-Frank Act is that it will only impact larger financial institutions. In fact, there are parts of the Dodd-Frank Act that will impact larger institutions, over 10 Billion in total assets, but there are several aspects of the Dodd-Frank Act that will have some pretty significant impacts on community banks and small financial institutions. Probably the most significant impact is going to be the creation of the Consumer Financial Protection Bureau, which has been given rule-writing authority. The Consumer Financial Protection Bureau will actually directly regulate some of the larger institutions, but the smaller institutions will be required to implement the rules written by the Consumer Financial Protection Bureau. However, those rules will be enforced by their current provincial regulators.

3) How significant is the Dodd-Frank Act when compared with other legislation?

The Dodd-Frank Act was a very significant piece of legislation. A matter of fact, it\’s over 2,300 pages in length to give some prospective on that. The Sarbanes Oxley Act is only 66 pages so that gives you some idea how significant this legislation is. Also it is important to keep in mind that the Dodd-Frank Act is a really framework for additional rules to be written so that the Consumer Financial Protection Bureau that I mentioned has been given a rule-writing authority. So, they ll be writing additional rules that will come out in the future over the period of years and so it will end up being even more significant than the original 2,300 pages that were written.

4) With the elimination of the Office of Thrift Supervision, how will saving and loans and other thrifts be affected?

Saving and loans and other thrifts will be significantly impacted by the elimination of the Office of Thrift Supervision or the OTS. The power of the OTS had previously has been shifted to the OCC /the Office of the Comptroller of the Currency and that change had already occurred. So those institutions, the thrifts, saving and loans, which could also include community banks that may have previously been savings, loans and thrifts have been converted to a stock bank. However, they may still be regulated by OTS. They may also have looked for a change to move over OCC in the near future.

5) What is the biggest challenge for community banks in implementing the Dodd-Frank Act?

The biggest challenge for community banks and other smaller financial institutions in implementing the Dodd-Frank Act is going to be where expectations are for compliance going forward. There is no doubt that it s going to require a robust compliance program to be in place. The challenge is that most community banks may have one or two people in place that are currently responsible for handling the entire compliance area for their institution. So, it is really all hands on deck going forward to maintain the robust compliant program. I believe that a risk-based compliance program is going to be a must for community banks. That process is going to require an effort to consider which of the regulatory areas present the most risk to each specific institution and really focusing on compliance, monitoring its compliance and testing for that compliance over time on the specific areas with the highest risk level and that is really the approach most community banks are going to be forced to take.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

Related Posts
In the nonprofit world, organizations are fueled and sustained by generous contributions and grants, which are used to support the organization’s mission.  Although such funding can often be the deciding...
Read More

“Threading the Needle”—Accounting Standards Update Closes Hole in Nonprofit Grant Guidance

Certain employees of governmental and not-for-profit organizations may qualify for a program that offers student loan forgiveness with zero tax liability.   The Public Service Loan Forgiveness (PSLF) Program gives full-time...
Read More

Tax-Free Student Loan Forgiveness for Eligible Public Servants

PYA, a national professional services firm headquartered in Knoxville, has been awarded a 2018 Top Workplaces honor by the Knoxville News Sentinel. The award is a result of employee feedback...
Read More

Knoxville News Sentinel Names PYA a Winner of the Greater Knoxville Area 2018 Top Workplaces Award

PYA has released a new white paper explaining how competing health systems may overcome antitrust obstacles to merger by formally committing to population health improvement in the communities they serve....
Read More

PYA White Paper Explains How Pro-Competitive Impacts of Hospital Consolidation Can Overcome Antitrust Concerns

The new Tax Cuts and Jobs Act (TCJA) can be confusing for many-- especially small business owners.  Although many aspects of the TCJA have been discussed, one component of the...
Read More

Government Clamps Down on “Deductible Fun” for Businesses

As businesses consider the impact of the Tax Cuts and Jobs Act (TCJA) introduced late last year, the corporate tax rate is receiving substantial attention.  However, according to a 2014...
Read More

2018 Tax Reform – The Excess Loss Limitation Likely to Squeeze Owners of Cyclical Businesses

According to its tagline, Atlanta Business RadioX spotlights “the city’s best businesses and the people who lead them.”   PYA is pleased to share that one of its own, Consulting Principal...
Read More

PYA’s Lori Foley Shared Insight in Live Radio Interview

Many Americans have a 401(k) retirement savings plan as a benefit of employment with their employers.  They contribute a percentage of their compensation to their 401(k) each pay period with...
Read More

Taking Distributions from Your 401(k): What You Need to Know

The recent Tax Cuts and Jobs Act (TCJA) imposes a limit on deductions for business interest for taxable years beginning in 2018.  The limit, like other aspects of the law,...
Read More

IRS Sheds Light on New Limit on Business Interest Expense Deductions

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

* indicates required
Monthly eNewsletters
See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop