The conventional wisdom is that Dodd-Frank compliance expenses are a significant drag on bank budgets. Sounds obvious, right?
Actually, it's not so clear cut. American Banker’s Harry Terris analyzed the relevant data on expenses in three categories: accounting and auditing, advisory and consulting, and legal. The numbers don’t track with a response to Dodd-Frank. "It is difficult to discern from their financial statements any explosion in compliance costs," he writes.
Legal fees are on the rise, but not for small banks, and that rise more likely has to do with the foreclosure proceedings for larger servicers.
At the end of the day "broad increases in compliance costs would most likely be reflected in growth in auditing bills as banks scrutinize the health of loan portfolios more closely, and in consulting fees as they look to outsiders to help interpret and implement new rules," he theorized. But nope, the first hasn't moved much. The second dipped and rebounded.
For the full piece see "Evidence Sketchy for Dodd-Frank Boom in Compliance Costs" (may require subscription).