Dodd-Frank Act’s Impact on Corporate Banking Still Murky

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Mercator Advisory Group reports that more than seven years after enactment of the Dodd-Frank Act, its direct financial impact to corporate banking business units remains unclear.

One of the 6 exhibits in this research report

The sweeping piece of legislation as structured left many unanswered questions about its potential impact, so we decided to take a look now and see what might be evident.

Although the Dodd-Frank Act (Wall Street Reform and Consumer Protection Act) is now seven years old, its requirements have yet to be finalized and take effect in all the ways that may originally have been intended. Initiatives are underway to amend the legislation, including complete repeal of certain sections. The original legislation covered 850 pages, contained 16 titles, 37 subtitles, 1,500 sections and at the time of passage, required almost 400 subsequent rules changes through various federal agencies.

In a new research report, Dodd-Frank and Corporate Banking: Still Murky After All These Years, Mercator Advisory Group examines the legislation to understand how it has affected corporate banking entities, and as such, what might change should various possible adjustments be made during the current administration.

"It is difficult to quantify the benefits of the Dodd-Frank Act since it was intended to improve safety of the banking industry and fairness toward consumers in the abstract. The sweeping piece of legislation as structured left many unanswered questions about its potential impact, so we decided to take a look now and see what might be evident, commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “As one might expect, for bank holding companies, compliance costs have become a larger part of business unit operating expenses. There is also evidence of unbalanced commercial lending constraints and pressured revenue margins, which banks have to manage. But a more insidious, longer-term impact may come from the underlying structure of the legislation, which leaves rules changes as a contentious political playground.”

Highlights of the report include:

  • A detailed review of Dodd-Frank sections that are most directly related to corporate banking businesses
  • Analysis of the incremental compliance costs, as well as possible benefits
  • A detailed comparison of two scenarios showing the impact of the liquidity coverage ratio on balance sheet flexibility
  • Discussion of the proposed changes to the law and most likely outcomes
  • Decisions that banks can make to best manage their portfolios going forward

This report is 19 pages long and has 6 exhibits.

Companies mentioned in this report include: ACL, Appian, CetoLogic, Convergepoint, Datamatics, Earnix, Finastra, FIS, Jack Henry, Moody’s Analytics, Nomis, Novantas, Openlink, Oracle, RSA Archer, SunTec, THC Network, Thomson Reuters, Wolters Kluwer, and Zafin.

Members of Mercator Advisory Group's Commercial and Enterprise Payments Advisory Service have access to this report as well as upcoming research for the year ahead, presentations, analyst access, and other membership benefits.

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About Mercator Advisory Group
Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal

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Karen Yetter
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