Quantitative Analysis of the Impact of The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 on the Cost of Regulatory Burden on Community Banks

Abstract

Following the financial crisis of 2007-2008 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was enacted. Community bankers protested that they did not contribute to the crisis but had been penalized more than the large banks because they (large banks) had the compliance personnel and resources to respond effectively to Dodd-Frank. After seven years, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Relief Act) to relieve the regulatory burden on community banks. This study examines whether the Relief Act had the intended effect of reducing the regulatory burden on community banks. I find that the Relief Act did indeed reduce the cost of the regulatory burden on community banks, contrary to community bankers’ survey responses. This study benefits regulators, bankers, and legislators.