Implementation of the Dodd Frank Wall Street and Consumer Protection Act will cost banks billions—$34 billion per year, to be more precise—wrote Standard and Poor’s analysts last week.
Looking into the legislation two years since it has been enacted, S&P examined the impact Dodd-Frank will have on eight of the largest banks: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, PNC Financial Services, U.S. Bancorp, and Wells Fargo.
“We estimate that the DFA could reduce pretax earnings for the eight large, complex banks by a total of $22 billion to $34 billion annually—higher than our prior estimate of $19.5 billion to $26 billion,” S&P wrote in a report.
In terms of regulatory compliance costs, S&P estimates those costs will amount to $2 billion to $2.5 billion annually. Those costs include reporting and compliance requirements spanning technology upgrades and new hiring.
Noting the rules that are still yet to be made under Dodd-Frank, S&P notes the potential that its estimates are subject to change as that rule making, including the Volcker Rule, which would restrict banks from making certain speculative investments, continues toward completion.
Written by Elizabeth Ecker