April 14, 2016

Dodd-Frank is Hurting Community Banks

Robert Greene

Luce Scholar, FinTech, Henry Luce Foundation

Marshall Lux

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Read the full piece at the NY Times Room for Debate.

With 22,000 pages of regulations, the destabilizing consequences of the Dodd-Frank Wall Street Reform and Consumer Protection Act are numerous. One notableconcern is that the law has forced consolidation of the United States banking system. The number of community banks (those with less than $10 billion in assets) shrank 14 percent between Dodd-Frank's passage in 2010 and late 2014. Surely, consolidation is driven by many factors, some of which are good. It is also no recent trend, but neither is regulatory growth: between 1997 and 2008, banking regulations grew 18 percent.