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ABA compiles regulatory avalanche visual document

The American Bankers Association has created an excellent visual document that shows the impact that regulation is having on bank customers and their communities. You can access the document by clicking here.

You're encouraged to use it with your bank's customers and others in your communities who are adversely impacted by the increased cost of providing financial services, especially to middle-class and low- to moderate-income Americans. Here are some highlights:

  • A $70 million Kansas bank now dedicates 3.5 out of 25 employees to do nothing other than compliance-related tasks. That's 15 percent of the bank's employees who do nothing except red tape analysis.
  • A Texas bank originated 1,296 mortgage loans in 2009 with a staff of 18. Four years later, in the wake of Dodd-Frank and the CFPB, that same bank originated 1,080 mortgages with 25 members of its mortgage staff. Fewer loans and more employees were the result of increased compliance requirements.
  • The number of Call Report pages has increased from 231 pages in 1960 to 1,955 last year.
  • With respect to real estate mortgage lending activities and the time spent on compliance issues, based on an ABA survey, the following statistics reflect the average number of hours per year a bank employee spends on the various new rules:
    • Escrow Rules – 45 hours;
    • HOEPA/High Cost Mortgage Rules – 61 hours (313 pages of regulation);
    • Loan Originator Rules – 64 hours (225 pages of new regulation);
    • Appraisal Rules – 69 hours;
    • General Implementation of new mortgage rules – 131 hours;
    • Mortgage servicing rules – 173 hours (456 pages of regulation);
    • ATR and QM rules – 204 hours (408 pages of regulation).
  • So far Dodd-Frank has required regulators to write and enforce 398 new rules.
  • Regulators have issued 5,905 pages of proposed regulations and 7,708 pages of final rules that now requires more than 60 million hours of paperwork for purposes of assuring compliance.
  • Regulators are only half-way through the task of writing the mandated new rules.

The relevance: aside from the cost incurred by the bank, which is passed along to the consumer, every hour a bank employee spends on compliance is an hour that employee cannot spend on taking care of customers or otherwise serving the community.

Moreover, $31 trillion has moved to the less-regulated “shadow” system, including the Farm Credit System because consumers are no longer willing to put up with the hassle.

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