The massive law, passed in July 2010, was supposed to curb the practices that led to the financial collapse of 2008. But not only is it expensive and cumbersome, its implementation also is taking forever, banking executives said.
Camp Hill-based Integrity Bank's compliance burden has increased by roughly $10,000 per employee in two years, President and CEO James Gibson told the Business Journal in December.
"These are ongoing annual costs," Gibson said.
Lititz-based Susquehanna Bank has added two dozen employees to its compliance operation because of Dodd-Frank, growing from 55 people to 80, Chairman and CEO William Reuter said.
"It has had a pretty significant effect on our cost structure," he said. "We're working through how to pay for it."
Before the Sarbanes-Oxley Act of 2002, which reformed disclosure rules for public companies, the office had five people, Reuter said.
Lawmakers said Dodd-Frank's impact on small banks would be minimal, but that hasn't panned out in practice, he said. It's harder for small banks to absorb the cost.
Susquehanna and Fulton are both considered medium-size banks. They are bigger than community banks, those with less than $10 billion in assets, but much smaller than megabanks such as Bank of America or Wells Fargo.
Integrity Bank is a community bank, with assets of around $660 million as of Sept. 30. The bank is offsetting compliance costs through growth and efficiency, Gibson said.
One of the most remarkable things about Dodd-Frank is how much of it has yet to be implemented. Regulators have churned out thousands of pages of rules but must churn out thousands more.
They are behind schedule. According to the monthly Dodd-Frank progress report maintained by New York City-based law firm Davis Polk & Wardwell, 279 rulemaking deadlines had come and gone as of Feb. 1. Regulators missed 63.1 percent of them.
Of the 398 rules that regulators must write, 37.2 percent have been finalized, 30.4 percent have been proposed, and nearly one-third — 32.4 percent — have not yet been proposed, the report said.
"Despite its good intention, (Dodd-Frank) has been counterproductive, working against solving the core problem it seeks to address," Fisher said.
That core problem, Fisher said, is the risk posed by "too big to fail" institutions, "TBTF" for short. They were the ones that caused world markets to seize up when their complex dealings unraveled between 2007 and 2009, he said.
Yet they have grown bigger since the crisis: Just 12 megabanks, 0.2 percent of the banks in the U.S., hold 69 percent of all bank assets, he said.
Since the early 1970s, the share of assets held by the five largest U.S. banks has risen from 17 percent to 52 percent, Fisher and colleague Harvey Rosenblum wrote in a 2012 Wall Street Journal op-ed.
In his speech, Fisher advocated breaking megabanks into multiple business entities, and limiting federal deposit insurance to entities engaged in conventional commercial and retail banking.
Doing so "would be especially helpful to non-TBTF banks," he said. "Our proposal would effectively level the playing field."
Community banks support small business better than megabanks, according to Dallas Fed research. Though they hold a sliver of U.S. bank assets, they accounted for more than half of all money lent to small companies, the Fed found.
But one could argue that breaking up the largest U.S. banks would put them at a disadvantage internationally, Wenger said.
It's a tough question, he said. "I don't have the answer."
Reuter said he did not foresee TBTF banks being broken up.
However, officials in Washington, D.C., chose not to take that approach when they had the opportunity, he said. Thus, U.S. financial institutions remain complicated, and that necessitates complicated regulation and oversight.
The practice of banking has changed, said Liechty, who helped write the portion of Dodd-Frank that established the U.S. Treasury's Office of Financial Research, which is charged with improving the government's financial data collection and analysis and assisting the Financial Stability Oversight Council.
Banks no longer retain most of the loans they make, instead offloading them to be repackaged into investment vehicles for pension funds and other sophisticated investors, he said.
To monitor systemic risk, regulators need full information on the instruments banks are placing into the wider market, Liechty said.
Because of that, "I don't have that much sympathy" with arguments against expanded disclosure requirements, he said.
He does, however, have sympathy with regulators. The Dodd-Frank rulemaking is going slowly because officials are working carefully, seeking to avoid unintended consequences, he said.
"Regulators don't optimize on speed. They optimize on quality," he said.
However Dodd-Frank evolves, local bankers said they will seek to mitigate its burdens.
"I think we're managing in a way that will not overburden us," Wenger said.