Mercator Blog

Dodd-frank Act’s Impact on Corporate Banking Still Murky
Date: January 24, 2018
Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service
It is not Mercator Advisory Group’s intention to review or summarize the entire massive piece of legislation referred to as the Dodd-Frank Act, a daunting task that one reputable law firm managed to accomplish in 117 pages back in 2010, the year of the Act’s passage. The global economic crisis is about 10 years behind us at this point, and the legislation introduced as a primary means to prevent another major dislocation of the financial sector is now seven years old. The Act did not take immediate effect in all its forms, however, because several major sections required time to become operational (for example, the section establishing the Consumer Financial Protection Bureau, or CFPB). Additionally, because the legislation was constructed somewhat for purposes of expedience, almost 400 follow-on rules were to be established by the regulators pending numerous studies and analysis. As of 2017, seven years after the law’s passage, many of these rules have yet to be finalized. In view of the political changes since the 2016 presidential election in the United States and various implications regarding Dodd-Frank and economic activity in general, Mercator Advisory Group decided to review the progress of the Act to determine whether results could be discerned as having an impact on corporate banking units within financial institutions.

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.

We begin this research report by outlining the Dodd-Frank Act and the ways in which it has affected bank holding companies in general and then focus on those sections of the Act that have relevance to corporate banking products and services more directly. We review the impact of the incremental compliance burden on banks and the actions they have taken. We then review and discuss the current and possible future impact of the present political environment over the coming several years. We also recommend actions the banks can take to recognize and take advantage of their existing capabilities to improve performance and be prepared for eventualities in whatever forms they may take.