Bankers Warn of Cost of New Regulations

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Wisconsin’s top bank leaders warn that the biggest rewrite of banking laws since the Great Depression will raise the cost of financial services for the public without addressing the root causes of the financial crisis. Bankers completing the Wisconsin Bankers Association (WBA) semiannual Bank CEO Economic Conditions Survey also report that demand for commercial and other benchmark loan categories remains weak throughout the state.

When asked how the soon-to-be enacted federal financial regulatory reform bill – commonly referred to as the Dodd-Frank Bill – will affect their bank, the 114 survey respondents overwhelmingly said it will increase compliance costs, limit revenue opportunities and may force them to charge for services that are currently free.

Bankers also expressed concern that the increased capital requirements in Dodd-Frank may reduce lending and slow the economic recovery.

Bankers further take issue with claims that consumers will be better protected as a result of Dodd-Frank. According to one banker, “[The] reform should have been directed at those who caused … the problems.” Another said Dodd-Frank will “generate a negative impact on both the bank and our customers.”

In stark contrast to how President Obama and federal lawmakers sold the regulatory reform package, Wisconsin bankers believe “Main Street” community banks will be hit harder by Dodd-Frank than the mega “Wall Street” firms. It will “place us on the endangered industry list,” a banker warned. Another said “larger organizations are better able to absorb the costs of compliance.”