Here Is How Much More Time, Money FIs Spent Dealing with New Regs in Q2

By CUToday.info09.11.2017

Financial institutions spent 27% more hours analyzing and implementing new regulations during the second quarter of 2017 over the first quarter of the year, according to analysis released as part of the Banking Compliance Index (BCI).

The BCI, published by the Regulatory Operations Center of Continuity, measures the incremental cost burden on financial institutions to keep up with regulatory changes, based on data sources that include the CFPB, FDIC, FED, NCUA and OCC. The BCI is calculated using an average size institution of $350 million.

The Banking Compliance Index inched up in the second quarter, to 0.87, according to the company. The result was an increase in costs of $13,925 for the typical $400-million institution, up 36% from the start of the year, the BCI reported.

“These changes were accompanied by an uptick in enforcement actions as well, as 71 actions were taken by regulators during the quarter,” the company said. “This accelerated the enforcement rate one full point over the first quarter figure, to 4.85%. This minor movement is nonetheless significant, because it indicates that the ‘Trump effect’ may be less impactful than first believed. It's possible that both stats may have been driven upward by a ‘return to business’ in Washington, which happens in any new administration after the dust settles on the initial transition period. Still, it's too early to determine whether this upward movement represents a continued trend, or if it will prove anomalous in future quarters.”

According to Continuity, with more than 1,500 pages of new regulation issued since July 1, and new leadership determined or installed for some top agency posts, the third quarter may move higher.

“But if the slew of new regs and proposals during the first half of July are not followed by additional activity, numbers may remain stagnant in Q3,” the company said in its analysis. “Only time will tell whether the upward trending will persist, or whether further or more significant drops may ensue.  In the all bets off environment of the current regulatory climate, anything is possible.”

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Reprinted with permission from CUToday.info, a leading source of news and resources for credit union decision-makers.