2017 Risk Practices Survey: Surprising Support for Dodd-Frank

Conventional wisdom holds that bankers dislike the Dodd-Frank Act, but most financial leaders don’t want Congress and President Trump to totally dismantle the law, according to Bank Director’s 2017 Risk Practices Survey, which is sponsored by FIS.

Eighty-two percent of the 167 independent directors and senior executives of U.S. banks above $500 million in assets surveyed by Bank Director in December 2016 and January 2017—following Trump’s election but before his inauguration—expect to see regulatory relief this year. When asked about the aspects of Dodd-Frank that should be scaled back, respondents focus on the Consumer Financial Protection Bureau: 70 percent want to change the CFPB’s structure, and 66 percent seek to scale back the bureau’s considerable enforcement authority. Banks have invested a lot at this point to meet the requirements laid out by the law, and while the majority want to see Dodd-Frank changed in some way, few—just 20 percent—believe it should be repealed entirely. A surprising 7 percent—all from banks under $5 billion in assets—say it should remain unchanged.

Other key findings:

• Forty-eight percent would like to see the Durbin amendment restrictions on debit interchange fees at banks with $10 billion or more in assets scaled back. Home Mortgage Disclosure Act rules, for 43 percent, and qualified mortgage rules, for 39 percent, are also identified as regulatory pain points.
• Eighty-four percent believe that bank regulators are open to the implementation of innovative products and services through relationships between banks and third-party financial technology firms.
• Eighty-three percent believe that lowering corporate tax rates would be the best way to encourage economic growth in the U.S.
• Preparing for cyberattacks continues to be another key challenge for the industry, according to 51 percent of respondents. Financial institutions have made considerable improvements to cybersecurity programs, including investments in technology to better detect and deter cyber threats (82 percent), improved training for bank staff (81 percent) and increased focus on cybersecurity at the board level (80 percent).
• Employee susceptibility to phishing or other types of social engineering schemes is the area in which the majority of respondents think the bank is least prepared for a cyberattack or data breach, at 57 percent.
• Seventy-seven percent say their board has discussed the Wells Fargo cross-selling scandal and its potential impact on the bank. Of these, 42 percent have evaluated their bank’s incentive compensation programs, and the same number evaluated the bank’s retail sales culture or goals. Eight percent eliminated cross-selling programs.

To view the full results to the survey, click here.

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