Dodd-Frank Costs Are Rising Rapidly, Study Finds

Published August 16, 2016

A new study reports the costs of complying with a 2010 federal law passed to protect consumers from economic instability have accumulated at an accelerating rate over the law’s lifespan.

Researchers at the American Action Forum (AAF) think tank found the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly referred to as “Dodd-Frank,” has added $36 billion to the cost of complying with financial regulations over the law’s six-year lifetime.

Compliance cost increases are also accelerating, AAF found. Between 2015 and 2016 alone, costs rose by more than $10 billion, an increase of 50 percent.

More than 60 additional regulations are scheduled to be added to Dodd-Frank in 2016, increasing the law’s cost by another $3.3 billion.

Negative Effects Admitted

Sam Batkins, director of regulatory policy at AAF, says even government regulators admit Dodd-Frank’s expansion is making it tougher to buy a house.

“The law is now six years old, and although there are still pieces left to implement, there are only a few major rulemakings on the horizon,” Batkins said. “Regulators have already forecasted higher mortgage costs because of Dodd-Frank regulation.”

Biggest New Regulation by Far

Patrick McLaughlin, a senior research fellow at the Mercatus Center, says Dodd-Frank is the most massive set of economic restrictions in recent history.

“Dodd-Frank induced more new regulatory restrictions than all other acts of Congress passed between 2009 and 2014, combined,” McLaughlin said.

McLaughlin says Dodd-Frank will have several negative effects.

“For one, prices will rise,” McLaughlin said. “Recent research by economists Dustin Chambers and Courtney Collins highlighted the fact that price inflation is strongly associated with the growth of the number of regulations over time. It’s going to be something to keep an eye on, because many effects, such as lessened competition or innovation, are typically ignored in agency-performed cost estimates.”