According to a “Dodd-Frank Regulations Impacts on Community Banks, Credit Unions and Systematically Important Institutions” report recently released by the Government Accountability Office (GAO), community banks continue to experience increases in compliance burdens as a result of newly-issued rules that implement the Dodd-Frank Wall Street Reform and Consumer Protection of 2010 (Dodd-Frank Act), the most comprehensive financial services reform legislation since the Great Depression.

To compile the report, GAO examined nine Dodd-Frank Act rules that were effective as of October 2015 for their impact on community banks and credit unions. During its examination, GAO analyzed data on community banks and credit unions from 2010 to 2015, reviewed studies, and interviewed staff from federal financial agencies as well as officials from community banks, credit unions, and their respective industry associations.

Although the Dodd-Frank Act exempts small institutions—defined as federally-insured community banks and credit unions with less than $10 billion in total assets—from several of its provisions and authorizes regulators to provide small institutions with relief from others, GAO found that several notable provisions imposed additional restrictions and compliance costs on community banks and credit unions. Many community banks and credit unions reported that several of the mortgage-related rules have increased their overall compliance burden, such as increases in staff and training, allocating time for regulatory compliance matters, updating compliance systems, and uncertainty—and outright fear—of litigation and the inability to sell loans to secondary markets and related costs.

Moreover, some reported these rules had begun to adversely affect some lending activities, most notably mortgage lending to customers not typically served by large financial institutions. Rules cited by community banks and credit unions included new integrated disclosure requirements, minimum underwriting standards for mortgage loans, new requirements related to escrow accounts and appraisals for higher-priced mortgage loans, and new mortgage servicing rules under RESPA and TILA.

In addition to concern over Dodd-Frank’s mortgage-related rules, many community banks and credit unions expressed unease surrounding the negative impacts of Dodd-Frank’s nonmortgage-related rules on certain business activities. Rules cited included requirements related to credit rating determination of certain securities, increased consumer disclosure regarding remittance transfers, and debit interchange fee caps.

As compliance burdens continue to grow for community banks and credit unions, the full impact of the Dodd-Frank Act remains uncertain because many of its rules have yet to be implemented. For example, many reports estimate that only about 64 percent of the Dodd-Frank Act’s financial reforms have been completed and finalized. In addition to rules that have yet to be issued, insufficient time has passed to evaluate others that have been finalized and are effective, including the hotly-debated TILA-RESPA Integrated Disclosure Rule, known to the financial services industry as TRID.