The Dodd-Frank Wall Street Reform and Consumer Protection Act, and Community Banking

The purpose of this research paper was to determine what the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act H.R. 4173 were on community banks and what effect increased compliance costs on community banks has on the overall health of the community banking industry. For the purpose of this paper, community banks will be defined as commercial banks in the United States with less than or equal to ;To understand the outcomes of the Dodd-Frank Act on community banking the paper analyzed commercial bank data before, during, and after the Dodd-Frank Act was passed to determine what impact the Dodd-Frank Act had on the community banking industry. The literature review and commercial bank data analysis revealed that community banks are at a disadvantage in coping with the new regulatory frame work post Dodd-Frank Act. Moreover, increases in compliance costs and devaluation of community bank stock relative to the commercial bank market can create a climate of consolidation. The paper provides prescriptions for the community banking industry that both community bank owners and law makers can use to ensure a healthy community banking industry survives for years to come.