The Dodd Frank Act not only brought us the Durbin amendment but also a host of other regulations, many that are in contradiction with the initial intent of protecting the consumer and making financial matters easier to understand. I guess Congress doesn't go by the KISS rule. Keep it simple, stupid! I feel for examiners who have to understand new regs that are so unclear that at least three different opinions are offered by the experts. And as for the financial institutions that have to comply, it might be a year to year change on what really is considered to be in compliance.
Even more concerning is trying to find someone who truly understands the new regulations. No one's fault, it is faulty legislation. You can't fix so many divergent issues with new and cumbersome regulations. If the economy is in slow motion, it might be that financial institutions, the source of business investment capital, are too burdened with complying and understanding the new laws that we don't have the resources or desire to stimulate the economy with investment.
In trying to make sure the financial crisis of 2008 doesn't repeat itself, Congress and the governmental agencies may have really ensured that small US financial institutions will slowly be less competitive. 38% of the deposits are controlled by the 5 largest banks, that's up from 26% just 6 years ago. Small institutions can't compete long term with the burden of regulations that no one can really understand. Leaving small institutions in a cycle of shrinking margins, fear of doing business/taking risk and eventually in a spiral to oblivion. Why do I say that? Because the CFPB is taking aim at every non-interest income source that small institutions need to pay for the rising cost of compliance, especially for regulations that no one really understands. A new model for financial institutions to survive is needed, but will regulatory concerns keep institutions for building the new model?
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