July 21 marked the one-year anniversary of the passage of the Dodd-Frank Act. Since enactment, several key rules have been finalized. However, the majority remain to be written. Some accounts suggest that 122 rules will be released across federal banking and other agencies in the third quarter of this year.
What have we seen over the past 12 months? The following are some of the rules and other provisions of Dodd-Frank now in place:
- As of Oct. 1, 2011, banks with more than $10 billion in total assets may only charge an interchange fee of 21 cents plus a 5-basis-point ad valorem charge on all debit card transactions. (See related article.)
- Banks may now pay interest on demand deposits based on the Dodd-Frank requirement that the Fed’s Board of Governors terminate Regulation Q restrictions.
- De novo banks may branch into any state regardless of their charter type or charter location as long as a state allows its own state-chartered de novo banks to branch within the state.
- The Consumer Financial Protection Bureau (CFPB) is now officially in business—albeit without a confirmed director—and will supervise banks with $10 billion or more in total assets, as well as nonbank financial firms. However, when the CFPB begins to write rules, those rules will most likely apply to banks of all sizes. Until a director is confirmed, the bureau is limited in its ability to supervise nonbank financial institutions.
- Organizations with $1 billion or more in total assets will have their incentive compensation structures for senior management reviewed as part of the supervisory process.
Over the next year, I anticipate that the impact and costs of Dodd-Frank to community banks will become more evident. I also expect we will see changes in products and services offered by community banks as they inevitably work to offset those costs. We will continue to follow these developments and update you on changes. Track the status of the Dodd-Frank rulemakings at the St. Louis Fed's Regulatory Reform Rules web site.