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S&P Two Years On, Reassessing The Cost Of Dodd-Frank For The Largest U.S. Banks

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Two Years On, Reassessing The Cost Of Dodd-Frank For The Largest U.S. Banks, August 9, 2012

  • “Although it has been two years since the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) was signed into law, many rules are still not in place or final. Nevertheless, Standard & Poor’s Ratings Services has updated its estimates of what the new regulations under the DFA might cost the eight U.S. large, complex banks–Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, PNC Financial Services, U.S. Bancorp, and Wells Fargo–which we believe will bear the brunt of the financial impact. We published our first estimates in November 2010. At the time, we believed that the bulk of the new regulations would have taken effect within two years and would have an impact on bank results by 2012 or 2013. However, the regulators have yet to write many of the rules, and many of those that are final have transition periods for their implementation that are longer than we originally expected. Considering what we know now about rules and regulations that have yet to be implemented, and based on our current forecasts for banks’ capital and earnings, we don’t believe the financial impact of regulatory reform will, in itself, affect our ratings on the eight large U.S. banks. However, proposed rules and regulations could change our assessments of banks’ business or risk positions (as our criteria define them), which could ultimately lead to rating actions in isolated cases.”
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