The rules imposed by the Dodd-Frank Wall Street Reform and
Consumer Protection Act had the following negative effect on
1. A reduction
in the number of small banks that are available to lend to
Since 2010, the number of commercial banks in the
U.S. plummeted from 6,623 to 4,888. Meanwhile, only 15 banks
hold more than 50% of U.S. banking assets.
2. A reduction in
the number of small banks that are willing to lend to small
Since 2008 lending to small businesses has decreased by 15%,
while lending to big businesses has increased by 35%.
3. The creation of
more larger banks that are not willing to lend to small
high cost of meeting data collection and reporting
requirements forced smaller banks to sell out or merge with
larger banks who want to focus on large customers.
4. A reduction in
the number of services.
Increased compliance costs meant that banks had to
shift resources to meet stringent requirements which caused
many small banks to reduce the number of services that they
5. It deliberately
kept small banks small.
Banks with over $50 billion in assets had to meet
more stringent requirements [such as stress test].
As a result many chose not to grow beyond that limit.
6. Banks with
less than $10 billion in assets could not tap into all of
the funding available to them.
Banks with less than $10 billions in assets were
subjected to the Volcker Rule [the rule is often referred to
as a ban on proprietary trading by commercial banks, whereby
deposits are used to trade on the bank's own accounts].