Accessible Version

DODD-FRANK 

REGULATIONS

Impacts on 

Community Banks, 

Credit Unions and 

Systemically 

Important Institutions

Report to Congressional Addressees

December 2015

GAO-16-169

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-169, a report to 

congressional addressees

December 2015

DODD-FRANK REGULATIONS

Impacts on Community Banks, Credit Unions and 

Systemically Important Institutions

Why GAO Did This Study

The 2010 Dodd-Frank Act requires or 

authorizes various federal agencies to 

issue rules to implement reforms 

intended to strengthen the financial 

services industry. The act, as 

amended, includes a provision for 

GAO to annually study these 

regulations. This report examines (1) 

the regulatory analyses federal 

agencies conducted in Dodd-Frank Act 

rulemakings and interagency 

coordination in the rulemaking process; 

(2) the possible impact of selected 

Dodd-Frank Act provisions and related 

rules on community banks and credit 

unions; and (3) the possible impact of 

selected Dodd-Frank Act provisions 

and their implementing rules on 

financial market stability.

GAO reviewed Federal Register 

releases for 26 Dodd-Frank Act rules

that became effective July 23, 2014-July 

22, 2015 to determine if agencies 

conducted the required regulatory 

analyses and coordination. Separately, 

GAO examined nine Dodd-Frank Act 

rules that were effective as of October 

2015 for their impact on community 

banks and credit unions. GAO chose 

these rules because regulators and 

others expected them to affect these 

institutions. GAO analyzed data on 

community banks and credit unions 

from 2010 to 2015, reviewed studies, 

and interviewed staff from federal 

financial agencies and market 

participants. Additionally, GAO 

developed indicators on the impact of 

systemic risk-related provisions and 

rules and conducted an economic 

analysis to assess the act’s impact on 

large bank holding companies. 

Regulators provided technical 

comments, which were incorporated as 

appropriate.

What GAO Found

Federal financial agencies conducted required regulatory analyses for rules 

issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection 

Act (Dodd-Frank Act) and also reported required coordination. These agencies 

also addressed key elements of Office of Management and Budget guidance for 

conducting cost-benefit analyses for rules considered major—rules likely to result 

in an annual impact on the economy of $100 million or more, among other things.

With regard to select Dodd-Frank Act rules expected to have impacts on 

community banks and credit unions, community banks, credit unions, and 

industry associations GAO interviewed cited an increase in compliance burden 

associated with these rules. This included increases in staff, training, and time 

allocation for regulatory compliance and updates to compliance systems. Some 

of these industry officials also reported a decline in specific business activities, 

such as loans that are not qualified mortgages, due to fear of litigation or not 

being able to sell those loans to secondary markets. The results of surveys we 

reviewed suggest that there have been moderate to minimal initial reductions in 

the availability of credit among those responding to the various surveys and 

regulatory data to date have not confirmed a negative impact on mortgage 

lending. However, these results do not necessarily rule out significant effects or 

the possibility that effects may arise in the future. Federal financial regulators are 

conducting retrospective analyses of Dodd-Frank Act rules on small entities. 

GAO developed indicators associated with resources used to comply with 

regulations and with business lines that may be affected by Dodd-Frank Act 

regulations to provide baselines against which to monitor future trends. For 

example, GAO’s indicators suggest that residential mortgage loans as a fraction 

of assets have generally grown for banks of all sizes and for some smaller credit 

unions but have decreased for larger credit unions. However, changes in GAO’s 

indicators may reflect factors other than the influence of Dodd-Frank Act rules, 

such as consumer demand for credit. 

The full impact of the Dodd-Frank Act remains uncertain because many of its 

rules have yet to be implemented and insufficient time has passed to evaluate 

others. Using recently released data, GAO updated indicators from its prior 

reports that monitor key risk characteristics of large U.S. bank holding 

companies, and added new indicators that monitor interconnectedness. Although 

changes in the indicators are not evidence of causal links to the act’s provisions, 

some indicators suggest companies’ leverage generally decreased and liquidity 

generally improved since the act’s passage. GAO’s updated regression analysis 

suggests that the act has had little effect on the funding costs of these 

companies and may be associated with improvements in some measures of their 

safety and soundness. Indicators associated with the act’s swap reforms suggest 

that holding companies have been requiring their counterparties to post a greater 

amount of collateral against derivatives contracts. GAO also developed indicators 

to monitor key risk characteristics of nonbank financial companies designated for 

supervision by the Board of Governors of the Federal Reserve System. Because 

few rules for these companies have been finalized or implemented, these 

indicators provide a baseline against which to monitor future trends.

View GAO-16-169. For more information, 

contact Lawrance Evans, Jr. at (202) 512-

8678 or evansl@gao.gov.
Letter 1

Page i GAO-16-169 Dodd-Frank Regulations

Background 7

Agencies Conducted Required Regulatory Analysis and Reported 

Coordinating as Required on Dodd-Frank Act Rulemakings 17

Community Banks and Credit Unions Cited a Cumulative 

Compliance Burden Associated with Dodd-Frank Act Rules 20

Possible Impacts of the Dodd-Frank Act on Bank SIFIs, 

Designated Nonbanks, and Swaps 46

Agency Comments and Our Evaluation 62

Appendix I: Objectives, Scope, and Methodology 66

Appendix II: Dodd-Frank Act Rules Effective as of July 22, 2015 73

Appendix III: Coordination for Dodd-Frank Act Rules Effective as of July 22, 2015 78

Appendix IV: Summary of Rulemakings Related to Selected Dodd-Frank Act Provisions Applicable to 

Designated Nonbanks 83

Appendix V: Trends in GAO Indicators for Bank Systemically Important Financial Institutions 88

Appendix VI: Econometric Analyses of the Impact of Enhanced Regulation and Oversight on Systemically 

Important Financial Institutions 99

Appendix VII: Dodd-Frank Act Rules Implementing Central Clearing, Capital, and Margin Swap Reforms 109

Appendix VIII: Comments from the National Credit Union Administration 111

Appendix IX: GAO Contact and Acknowledgments 112

Appendix X: Accessible Data 113

Agency Comment Letter 113

Data Tables 114

Tables

Table 1: Federal Prudential Regulators and Their Basic Prudential 

Functions, as of November 2015 8

Table 2: Authorizing and Other Statutes That Apply to Financial 

Regulators and Their Implications for Benefit-Cost 

Considerations 15

Contents
Table 3: Select Mortgage Rules under the Dodd-Frank Act 

Effective by October 2015—General Rule Descriptions, 

Applicable Exemptions, and Effective Dates 21

Table 4: Select Nonmortgage-Related Rules under the DoddFrank Act Effective by October 2015—Rule Descriptions, 

Available Exemptions, and Effective Dates 34

Table 5: Summary of Changes in Indicators for Bank Systemically 

Important Financial Institutions (Bank SIFIs), from 2010 

through 2015 49

Table 6: Estimated Changes in Bank Systematically Important 

Financial Institutions (Bank SIFIs) Funding Costs and 

Measures of Safety and Soundness Associated with the 

Dodd-Frank Act , from Third Quarter 2010 through 

Second Quarter 2015 (Percentage Points) 53

Table 7: Dodd-Frank Act Rules Effective from July 23, 2014, 

through July 22, 2015 73

Table 8: Evidence of Coordination on Dodd-Frank Act Rules 

Effective from July 23, 2014, through July 22, 2015 78

Table 9: Rulemakings Implementing Selected Dodd-Frank Act 

Provisions Applicable to Designated Nonbanks and Bank 

SIFIs and Their Status as of July 22, 2015 83

Table 10: Indicators of Size for U.S. Bank Holding Companies, 

from Third Quarter 2010 to Second Quarter 2015 91

Table 11: Indicators of Interconnectedness for U.S. Bank 

Systemically Important Financial Institutions (bank SIFIs), 

from Third Quarter 2010 to Second Quarter 2015 93

Table 12: Indicators of Complexity for U.S. Bank Systemically 

Important Financial Institutions (bank SIFIs) , from Second 

Quarter 2010 to Second Quarter 2015 95

Table 13: Indicators of Leverage for U.S. Bank Holding 

Companies, from Third Quarter 2010 to Second Quarter 

201596

Table 14: Indicators of Liquidity for U.S. Bank Holding Companies, 

from Third Quarter 2010 through Second Quarter 2015 98

Table 15: Estimated Changes in Bank Systemically Important 

Financial Institution Funding Costs and Measures of 

Safety and Soundness Associated with the Dodd-Frank 

Act, From Third Quarter 2010 through Second Quarter 

2015 (Percentage Points) 103

Table 16: Estimated Changes in Bank Systemically Important 

Financial Institution (Bank SIFI) Funding Costs and 

Measures of Safety and Soundness Associated with the 

Page ii GAO-16-169 Dodd-Frank Regulations
Dodd-Frank Act, by Quarter From Third Quarter 2010 

through Second Quarter 2015 (Percentage Points) 106

Table 17: Select Dodd-Frank Act Rules Implementing Central 

Clearing Swap Reforms Final as of July 22, 2015 109

Table 18: Select Dodd-Frank Act Rules Implementing Capital and 

Margin Swap Reforms Proposed as of July 22, 2015 110

Data Tables for Figure 1: Indicators of the Potential Impact of the 

Dodd-Frank Act on Banks by Size, First Quarter 2006 

through Second Quarter 2015 114

Data Tables for Figure 2: Indicators of the Potential Impact of the 

Dodd-Frank Act on Credit Unions by Size, First Quarter 

2006 through Second Quarter 2015 118

Data Tables for Figure 3: Indicators for Designated Nonbanks and 

Large Publicly Traded Banks and Insurance Companies, 

Second Quarter 2012 through Second Quarter 2015 123

Total Equity as a Percentage of Total Assets for Designated 

Nonbanks and Large Publicly Traded Banks and 

Insurance Companies, 2012Q2-2015Q2 (Percentage ). 125

Figure 4: Fair Value of Collateral as a Percentage of Net Current 

Credit Exposure for Over-the-Counter Derivatives 

Contracts for Counterparty Type and for All Counterparty 

Types Combined, from Second Quarter 2009 through 

Second Quarter 2015 (Percentage) 126

Figures

Page iii GAO-16-169 Dodd-Frank Regulations

Figure 1: Indicators of the Potential Impact of the Dodd-Frank Act 

on Banks by Size, First Quarter 2006 through Second 

Quarter 2015 43

Figure 2: Indicators of the Potential Impact of the Dodd-Frank Act 

on Credit Unions by Size, First Quarter 2006 through 

Second Quarter 2015 45

Figure 3: Indicators for Designated Nonbanks and Large Publicly 

Traded Banks and Insurance Companies, Second 

Quarter 2012 through Second Quarter 2015 58

Figure 4: Fair Value of Collateral as a Percentage of Net Current 

Credit Exposure for Over-the-Counter Derivatives 

Contracts for Counterparty Type and for All Counterparty 

Types Combined, from Second Quarter 2009 through 

Second Quarter 2015 (Percentage) 60
Abbreviations

Page iv GAO-16-169 Dodd-Frank Regulations

AIG American International Group, Inc.

APA Administrative Procedure Act

ATR/QM Ability to Repay and Qualified Mortgage Standards

Call Reports Reports of Condition and Income

CDS credit default swap

CFPB Consumer Financial Protection Bureau

CFTC Commodity Futures Trading Commission

CRA Congressional Review Act

CUNA Credit Union National Association

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer

Protection Act

E.O. executive order

EGRPRA Economic Growth and Regulatory Paperwork

Reduction Act of 1996

FDIC Federal Deposit Insurance Corporation

Federal Reserve Board of Governors of the Federal Reserve System

FFEIC Federal Financial Institutions Examination Council

FHFA Federal Housing Finance Agency

FSOC Financial Stability Oversight Council

GECC General Electric Capital Corporation

G-SIB globally systemically important bank

HUD Department of Housing and Urban Development

ICBA Independent Community Bankers of America

MetLife MetLife, Inc.

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

OMB Office of Management and Budget

PRA Paperwork Reduction Act of 1995

Prudential Prudential Financial, Inc.

RESPA Real Estate Settlement Procedures Act

RFA Regulatory Flexibility Act

SEC Securities and Exchange Commission

SIFI systemically important financial institution

TILA Truth in Lending Act

Treasury Department of the Treasury

TRID TILA-RESPA Integrated Disclosure
Page v GAO-16-169 Dodd-Frank Regulations

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Page 1 GAO-16-169 Dodd-Frank Regulations

441 G St. N.W.

Washington, DC 20548

December 30, 2015

Congressional Addressees

In 2010, Congress passed the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act) in response to the 2007–2009 

financial crisis that disrupted the U.S. financial system.1 Under the DoddFrank Act, federal agencies are directed or have the authority to issue 

hundreds of regulations to implement the act’s provisions. As agencies 

continue to develop and implement the regulations, some industry 

associations and others have reported on the potential impact, 

individually and cumulatively, on financial markets and nonfinancial 

institutions. Although the Dodd-Frank Act exempts small institutions, such 

as community banks and certain credit unions, from several of its 

provisions, and authorizes regulators to provide small institutions with 

relief from certain regulations, it also contains provisions that impose 

additional restrictions and compliance costs on these institutions.2

Agencies normally must comply with various federal rulemaking 

requirements as they draft and implement regulations. For example, 

many rulemakings are substantive and are generally subject to the notice 

and comment requirements of the Administrative Procedure Act (APA),

and many rulemakings must include some form of regulatory analysis, 

which provides a formal way of organizing evidence to help in 

understanding the potential effects of new regulations.3 Certain statutes 

and executive orders require varying regulatory analyses, and the extent 

 

1Pub. L. No. 111-203, 124 Stat.1376 (2010). We identified 236 provisions of the act that 

require regulators to issue rulemakings. See GAO, Financial Regulatory Reform: 

Regulators Have Faced Challenges Finalizing Key Reforms and Unaddressed Areas Pose 

Potential Risks, GAO-13-195 (Washington, D.C.: Jan. 23, 2013).

2Although no commonly accepted definition of a community bank exists, the term often is 

associated with smaller banks (e.g., under $1 billion in assets) that provide relationship 

banking services to the local community and have management and board members who 

reside in the local community. In this report, we generally define community banks as 

insured depository institutions that are not credit unions with less than $10 billion in total 

assets. We also include in our analysis federally insured credit unions with less than $10 

billion in total assets. (The Dodd-Frank Act exempts, or provides possible relief for certain 

small institutions from a number of its provisions based on that threshold.)

3Pub. L. No. 89-554, § 553, 80 Stat. 378, 383 (1966) (codified at 5 U.S.C. § 553). 

Letter
to which independent regulatory agencies, such as some of the federal 

financial regulators (financial regulators), are subject to the requirements 

varies.

Page 2 GAO-16-169 Dodd-Frank Regulations

4 For example, Executive Order (E.O.) 12,866 requires executive 

federal agencies to assess costs and benefits of proposed regulatory 

action and any alternatives.5 This order does not apply to independent 

regulatory agencies such as banking, securities, or futures regulators, or 

the Bureau of Consumer Financial Protection (commonly known as the 

Consumer Financial Protection Bureau, or CFPB). However, the CFPB 

has a separate requirement under the Act to consider the potential 

benefits and costs to consumers and covered persons as part of a 

rulemaking under a federal consumer financial law.6

Section 1573(a) of the Department of Defense and Full-Year Continuing 

Appropriations Act of 2011 amends the Dodd-Frank Act and includes a 

provision for us to annually review financial services regulations, including 

 

4

Independent regulatory agencies are identified as such in the Paperwork Reduction Act. 

They include, but are not limited to, the agencies to which we refer as federal financial 

regulators—the Board of Governors of the Federal Reserve System, Bureau of Consumer 

Financial Protection, Commodity Futures Trading Commission, Federal Deposit Insurance 

Corporation, Office of the Comptroller of the Currency, National Credit Union 

Administration, and Securities and Exchange Commission. 44 U.S.C. § 3502(5). In 

contrast to independent regulatory agencies, executive agencies are cabinet departments 

and other agencies that answer directly to the President.

5E.O. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993). For significant rules, the order 

requires agencies to prepare a detailed regulatory (or economic) analysis of anticipated 

benefits and costs of the regulation and the benefits and costs of potentially effective and 

reasonably feasible alternatives. More recently, E.O. 13,563 supplemented E.O. 12,866, 

in part by incorporating its principles, structures, and definitions. E.O.13,563, 76 Fed. Reg. 

3,821 (Jan. 18, 2011). E. O. 12,866 contains 12 principles of regulation that direct 

agencies to perform specific analyses to identify the problem to be addressed, assess its 

significance, assess the benefits and costs of the intended regulation, design the 

regulation in the most cost-effective manner to achieve the regulatory objective, and base 

decisions on the best reasonably obtainable information available.

6Pub. L. No. 111-203, § 1022(b)(2)(A)(i), 124 Stat. 1376, 1980 (2010) (codified at 12 

U.S.C. § 5512(b)(2)(A)(i)).
those of CFPB.

Page 3 GAO-16-169 Dodd-Frank Regulations

7 We have previously issued four reports under this 

mandate.8 This report examines the

· regulatory analyses conducted by the federal financial regulators and 

the Department of the Treasury (Treasury) in their Dodd-Frank Act 

rulemakings, including their assessments of which rules they 

considered to be major rules, and coordination between and among 

federal regulators on these rulemakings;9

· possible impact of promulgated Dodd-Frank Act provisions on 

community banks and credit unions and their business activities; and

· possible impact of selected Dodd-Frank Act provisions and their 

implementing regulations on financial market stability.

To examine the regulatory analyses and coordination conducted by the 

federal financial regulators and Treasury, we focused our analysis on the 

final rules issued pursuant to the Dodd-Frank Act that became effective 

from July 23, 2014, through July 22, 2015, a total of 26 rules (see app. 

 

7Pub. L. No. 112-10, § 1573(a), 125 Stat. 38, 138-39 (codified at 12 U.S.C. § 5496b). We 

are to analyze (1) the impact of regulation on the financial marketplace, including the 

effects on the safety and soundness of regulated entities, cost and availability of credit, 

savings realized by consumers, reductions in consumer paperwork burden, changes in 

personal and small business bankruptcy filings, and costs of compliance with rules, 

including whether relevant federal agencies are applying sound cost-benefit analysis in 

promulgating rules; (2) efforts to avoid duplicative or conflicting rulemakings, information 

requests, and examinations; and (3) other matters related to the operations of financial 

services regulations deemed appropriate by the Comptroller General. The focus of our 

reviews is on the financial regulations promulgated pursuant to the Dodd-Frank Act.

8GAO, Dodd-Frank Act Regulations: Implementation Could Benefit from Additional 

Analyses and Coordination, GAO-12-151 (Washington, D.C.: Nov. 10, 2011); Dodd-Frank 

Act Regulations: Agencies’ Efforts to Analyze and Coordinate Their Rules, GAO-13-101 

(Washington, D.C.: Dec. 18, 2012); Dodd-Frank Regulations: Agencies Conducted 

Regulatory Analyses and Coordinated but Could Benefit from Additional Guidance on 

Major Rules, GAO-14-67 (Washington, D.C.: Dec. 11, 2013); and Dodd-Frank 

Regulations: Regulators’ Analytical and Coordination Efforts, GAO-15-81 (Washington, 

D.C.: Dec. 18, 2014).

9As defined by the Congressional Review Act (CRA), a major rule is generally one that the 

Office of Management and Budget finds has resulted in or is likely to result in (1) an 

annual effect on the economy of $100 million or more; (2) a major increase in costs or 

prices; or (3) significant adverse effects on competition, employment, investment, 

productivity, innovation, or on the ability of U.S.-based enterprises to compete with 

foreign-based enterprises in domestic and export markets. Pub. L. No. 104-121, tit. II, § 

251, 110 Stat. 868 (1996) (codified at 5 U.S.C. § 804(2)).
II).

Page 4 GAO-16-169 Dodd-Frank Regulations

10 We reviewed federal statutes, regulations, and GAO studies on 

these rules as well as Federal Register releases that contain information 

on the regulatory analyses conducted by agencies and their coordination 

efforts. Using GAO’s Federal Rules database, we found that 6 of the 15 

rules were classified by the Office of Management and Budget (OMB) as 

major rules under the Congressional Review Act (CRA). We developed a 

data collection instrument to compare and assess the regulatory analysis 

conducted for the major rules against the principles outlined in OMB 

Circular A-4, which provides guidance to federal agencies on the 

development of regulatory analysis.11 We also reviewed the Dodd-Frank 

Act and Federal Register releases to identify the interagency coordination 

or consultation requirements as required by the act for the 26 rules in our 

scope.

To assess the possible impact of the Dodd-Frank Act on community 

banks and credit unions, we used our September 2012 report, which 

identified provisions expected to affect some or all community banks and 

credit unions, to identify select final rules that became effective by 

October 2015.12 While we started with a larger population of rules, we 

specifically reviewed nine final rules which were identified by the 

community banks and credit unions we interviewed as potentially having 

an impact for the purpose of this report. We reviewed the Federal 

Register releases for these final rules and relevant material on the act 

and the final rules, as well as five studies by federal and state regulators, 

industry associations, and academics on the potential impact of the final 

rules on community banks and credit unions. All but one study we 

reviewed relied on surveys of banks, usually contacted through banking 

association member lists. The final study consisted of a study of all 

 

10We use rules, regulations, or rulemakings generally to refer to Federal Register notices 

of agency action pursuant to the Dodd-Frank Act, including final and interim final rules. 

These terms do not include orders, guidance, notices, interpretations, corrections, or 

policy statements. With this and our past four reports, we have reviewed all Dodd-Frank 

Act rules in effect as of July 22, 2015. See GAO-12-151, GAO-13-101, GAO-14-67, and 

GAO-15-81. 

11As independent regulatory agencies that are not required to follow the economic 

analysis requirements of E.O. 12,866, the financial regulatory agencies also are not 

required to follow OMB Circular A-4. However, Circular A-4 is an example of best 

practices for agencies to follow when conducting regulatory analyses, and the financial 

regulatory agencies have told us that they follow the guidance in spirit.

12GAO, Community Banks and Credit Unions: Impact of Dodd-Frank Act Depends Largely 

on Future Rulemakings, GAO-12-881 (Washington, D.C.: Sept.13, 2012).
payment card networks. We conducted semi-structured interviews with 

federal regulators, representatives from the Independent Community 

Bankers of America (ICBA), the Credit Union National Association 

(CUNA), the National Federation of Independent Business, the U.S. 

Chamber of Commerce, and a non-generalizable, purposive sample of 

four state credit union and community bank associations and eight 

community banks and credit unions about the impact of the final rules on 

community banks and credit unions. Between July and September 2015, 

we interviewed representatives from two state community banking and 

two state credit union associations from Georgia, Illinois, Louisiana, and 

Pennsylvania. We also interviewed representatives from four community 

banks and four credit unions that fell in each of the four asset categories: 

under $250 million, between $250 million and $500 million, between $500 

million and $1 billion, and between $1 billion and $10 billion. While the 

information we obtained from the interviews provides useful insights, it 

cannot be used to make generalizations about the experiences of all 

community banks and credit unions since the selection of interviewees 

relied on non-probability sampling methods. Nevertheless, we purposely 

sought to achieve variety in our sample as a way to gain access to a 

range of experiences within the target population.

We also analyzed bank quarterly Reports of Condition and Income (Call 

Reports) data for depository institutions and credit unions obtained from 

the Federal Financial Institutions Examination Council (FFIEC) and 

National Credit Union Administration (NCUA), respectively, from the first 

quarter of 2006 through the second quarter of 2015. We used these data 

to construct indicators of the cumulative costs associated with complying 

with Dodd-Frank Act regulations, including numbers of employees per $1 

million in assets, non-interest expenses as a percentage of assets, and 

earnings as a percentage of assets.

Page 5 GAO-16-169 Dodd-Frank Regulations

13 We used the same data to 

construct indicators associated with business lines that may be affected 

by Dodd-Frank Act regulations, including residential mortgage lending as 

a percentage of assets. We assessed the reliability of the FFIEC and 

NCUA data by reviewing relevant documentation and electronically 

testing the data for missing values, outliers, and invalid values, and we 

found the data to be sufficiently reliable for the purpose of constructing 

indicators associated with compliance costs and business lines for banks 

 

13Non-interest expenses are for resources other than borrowed funds and generally 

include the costs of resources (such as compliance staff or consulting services) banks and 

credit unions are likely to employ to comply with regulations.
and credit unions. Although we analyzed the impact of a number of 

specific Dodd-Frank Act provisions on community banks and credit 

unions, assessing the extent to which these provisions or their related 

regulations should apply to such institutions was beyond the scope of our 

work.

To analyze the impact of the Dodd-Frank Act on financial market stability, 

we updated several indicators developed in our prior reports with data 

through the second quarter of 2015.

Page 6 GAO-16-169 Dodd-Frank Regulations

14 We also created new indicators for 

banks that are systemically important financial institutions (bank SIFIs) 

and nonbank financial institutions designated by the Financial Stability 

Oversight Council (FSOC) for supervision by the Board of Governors of 

the Federal Reserve (Federal Reserve), or designated nonbanks.15 We 

updated indicators monitoring changes in size, complexity, leverage, and 

liquidity of bank SIFIs and added new indicators of interconnectedness, 

which captures direct or indirect linkages between financial institutions 

that may transmit distress from one institution to another. We updated our 

econometric analysis estimating changes in measures of the (1) funding 

cost for bank SIFIs and (2) safety and soundness of bank SIFIs. Since we 

began developing and tracking indicators for bank SIFIs, FSOC has 

designated four nonbank institutions for enhanced supervision by the 

Federal Reserve. As such, we added new indicators associated with the 

size, interconnectedness, leverage, and liquidity of these institutions. 

Finally, we updated our indicators monitoring the extent to which certain 

swap reforms are consistent with the act’s goals of reducing risk.16 For 

those parts of our methodology that involved the analysis of computerprocessed data from Bloomberg, the Federal Reserve Bank of Chicago, 

the Federal Reserve, the National Information Center, and the Bureau of 

Economic Analysis, we assessed the reliability of these data by reviewing 

relevant documentation; electronically testing the data for missing values, 

 

14See GAO-13-101, GAO-14-67, and GAO-15-81.

15The Dodd-Frank Act does not use “systemically important financial institution.” 

Academics and other experts commonly use this term to refer to bank holding companies 

with $50 billion or more in total consolidated assets and nonbank financial companies 

designated by the FSOC for Federal Reserve supervision and subject to enhanced 

prudential standards under the Dodd-Frank Act. For this report, we refer to these bank 

and nonbank financial companies as bank SIFIs and designated nonbanks, respectively.

16Swaps include interest rate swaps, commodity-based swaps, and broad-based credit 

default swaps. Security-based swaps include single-name and narrow-based credit default 

swaps and equity-based swaps.
outliers, and invalid values; and interviewed Federal Reserve staff about 

Federal Reserve’s data. We determined the data were sufficiently reliable 

for our purposes—monitoring changes in SIFI characteristics, estimating 

changes in the cost of credit bank SIFIs provided and their safety and 

soundness, and assessing the amount of margin collateral that over-thecounter derivatives counterparties used.

We conducted this performance audit from April 2015 to December 2015 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Page 7 GAO-16-169 Dodd-Frank Regulations

In the banking industry, the specific regulatory configuration generally 

depends on the type of charter the banking institution chooses. 

Depository institution charter types include

· commercial banks, which originally focused on the banking needs of 

businesses but over time have broadened their services;

· thrifts, which include savings associations and savings and loans, and 

were originally created to serve the needs—particularly the mortgage 

needs—of those not served by commercial banks; and

· credit unions, which are member-owned cooperatives run by memberelected boards with an historical emphasis on serving people of 

modest means.17

All depository institutions that have federal deposit insurance have a 

federal prudential regulator that generally may issue regulations and take 

enforcement actions against institutions within its jurisdiction. These 

regulators also oversee depository institutions for safety and soundness 

purposes and compliance with other laws and regulations. Holding 

companies that own or control a bank or thrift are subject to Federal 

 

17Unless otherwise indicated, we use the term “banks” to refer to commercial banks and 

thrifts in this report. 

Background

Federal Prudential 

Regulators
Reserve supervision. The Bank Holding Company Act of 1956 and the 

Home Owners’ Loan Act set forth regulatory frameworks for bank holding 

companies and thrift holding companies, respectively.

Page 8 GAO-16-169 Dodd-Frank Regulations

18 The Dodd-Frank 

Act made the Federal Reserve the regulator of thrift holding companies 

and amended the Home Owners’ Loan Act and the Bank Holding 

Company Act to create certain similar requirements for bank and thrift 

holding companies.19 The prudential regulators are identified in table 1.

Table 1: Federal Prudential Regulators and Their Basic Prudential Functions, as of November 2015

Agency Basic function

Office of the Comptroller of the Currency Charters and supervises national banks, federal savings associations (also known as 

federal thrifts), and federally chartered branches and agencies of foreign banks.

Board of Governors of the Federal Reserve 

System

Supervises state-chartered banks that opt to be members of the Federal Reserve 

System, bank and thrift holding companies, and the nondepository institution 

subsidiaries of those institutions, and nonbank financial companies designated by the 

Financial Stability Oversight Council for enhanced supervision.aAlso supervises Edge 

corporations pursuant to the Edge Act and certain designated financial market utilities 

(such as a clearinghouse) pursuant to the Dodd-Frank Act.bAlso supervises statelicensed branches and agencies of foreign banks and regulates the U.S. nonbanking 

activities of foreign banking organizations.

Federal Deposit Insurance Corporation Supervises state-chartered banks that are not members of the Federal Reserve System, 

as well as state savings associations; insures the deposits of all banks and thrifts that 

are approved for federal deposit insurance; resolves all failed insured banks and thrifts 

and, if appointed receiver by the Secretary of the Treasury, has authority to resolve 

certain large bank holding companies and nonbank financial companies.

National Credit Union Administration Charters and supervises federally chartered credit unions and insures savings in federal 

and most state-chartered credit unions.

Source: GAO.|GAO-16-169

a

The Dodd-Frank Act does not use the term “systemically important financial institution” (SIFI). This 

term is commonly used by academics and other experts to refer to bank holding companies with $50 

billion or more in total consolidated assets and nonbank financial companies designated by the 

Financial Stability Oversight Council for Federal Reserve supervision and enhanced prudential 

standards under the Dodd-Frank Act.

 

18Bank Holding Company Act of 1956, Pub. L. No. 84-511, 70 Stat. 133 (codified as 

amended at 12 U.S.C. §§ 1841-1852); Home Owners’ Loan Act, Pub. L. No. 73-43, 48 

Stat. 128 (1933) (codified as amended at 12 U.S.C. §§ 1461-1470). Bank holding 

companies own or control a bank, as defined in the Bank Holding Company Act. 12 U.S.C. 

§ 1841(a)(1),(c). Savings and loan holding companies directly or indirectly control a 

savings association. 12 U.S.C. § 1467a(a)(1)(D).

19For a more detailed discussion of the regulatory framework for bank holding companies 

and savings and loan holding companies, see GAO, Bank Holding Company Act: 

Characteristics and Regulation of Exempt Institutions and the Implications of Removing 

the Exemptions, GAO-12-160 (Washington, D.C.: Jan. 19, 2012).
bEdge Act corporations are established as separate legal entities and may conduct a range of 

international banking and other financial activities in the United States. Pub. L. No. 66-106, 41 Stat. 

378 (1919) (codified as amended at 12 U.S.C. § 611).

The securities and futures markets are regulated under a combination of 

self-regulation (subject to oversight by the appropriate federal regulator) 

and direct oversight by the Securities and Exchange Commission (SEC) 

and Commodity Futures Trading Commission (CFTC), respectively.

Page 9 GAO-16-169 Dodd-Frank Regulations

20

SEC regulates the securities markets, including participants such as 

securities exchanges, broker-dealers, investment companies, corporate 

issuers, and certain investment advisers and municipal advisors.21 SEC’s 

mission is to protect investors; maintain fair, orderly, and efficient 

markets; and facilitate capital formation. SEC also oversees selfregulatory organizations—including securities exchanges, clearing 

agencies, and the Financial Industry Regulatory Authority. These 

organizations have responsibility for overseeing securities markets and 

their members; establishing the standards under which their members 

conduct business; monitoring business conduct; and bringing disciplinary 

actions against members for violating applicable federal statutes, SEC’s 

rules, and their own rules.22

CFTC is the primary regulator of futures markets, including futures 

exchanges and intermediaries, such as futures commission merchants.23

CFTC’s mission is to protect market users and the public from fraud, 

manipulation, abusive practices, and systemic risk related to derivatives 

subject to the Commodity Exchange Act, and to foster open, competitive, 

and financially sound futures markets. CFTC oversees the registration of 

intermediaries and relies on self-regulatory organizations, including the 

 

20State government entities also oversee certain securities activities.

21Some smaller investment advisers are regulated by state government entities.

22In the securities markets, self-regulatory organizations, such as a national securities 

exchange or association, are regulators that have responsibility for much of the day-to-day 

oversight of the securities markets and broker-dealers under their jurisdiction.

23Futures commission merchants are individuals, associations, partnerships, corporations, 

and trusts that solicit or accept orders for the purchase or sale of a commodity for future 

delivery, among other products, on or subject to the rules of any exchange and that accept 

payment from or extend credit to those whose orders are accepted. 7 U.S.C. § 1a(28). 

Firms and individuals trading futures with the public or giving advice about futures trading 

must be registered with the National Futures Association, the self-regulatory organization 

for the U.S. futures industry.

Securities and Futures 

Regulators
futures exchanges and the National Futures Association, to establish and 

enforce rules for member behavior. CFTC and SEC jointly regulate 

security futures (generally futures on single securities and narrow-based 

security indexes). In addition, Title VII of the Dodd-Frank Act expands 

regulatory responsibilities for CFTC and SEC by establishing a new 

regulatory framework for swaps. The act authorizes CFTC to regulate 

swaps and SEC to regulate security-based swaps with the goals of 

reducing risk, increasing transparency, and promoting market integrity in 

the financial system. CFTC and SEC share authority over mixed swaps—

security-based swaps that have a commodity component.

The Dodd-Frank Act transferred consumer protection oversight and other 

authorities regarding certain consumer financial protection laws and 

institutions from multiple federal regulators to CFPB, creating a single 

federal entity to help, among other things, foster consistent enforcement 

of federal consumer financial laws.

Page 10 GAO-16-169 Dodd-Frank Regulations

24 The Dodd-Frank Act charged CFPB 

with the following responsibilities, among others:

· ensuring that consumers are provided with timely and understandable 

information to make responsible decisions about financial 

transactions;

· ensuring that consumers are protected from unfair, deceptive, or 

abusive acts and practices, and from discrimination;

· monitoring compliance with federal consumer financial law and taking 

appropriate enforcement action to address violations;

· identifying and addressing outdated, unnecessary, or unduly 

burdensome regulations;

· ensuring that federal consumer financial law is enforced consistently, 

without regard to the status of a person as a depository institution, in 

order to promote fair competition;

 

24These authorities transferred on July 21, 2011. CFPB has primary supervision and 

enforcement authority for federal consumer protection laws for depository institutions with 

more than $10 billion in assets and their affiliates. The prudential regulators—the Federal 

Reserve, Office of the Comptroller of Currency , Federal Deposit Insurance Corporation, 

and NCUA—that previously supervised and examined all depository institutions and credit 

unions for consumer protection, retain supervision and enforcement authority for certain 

consumer protection laws for those depository institutions with more than $10 billion in 

assets and their affiliates, and they have primary supervision and enforcement authority 

for consumer financial laws for institutions that have $10 billion or less in assets.

Consumer Financial 

Protection Bureau
· ensuring that markets for consumer financial products and services 

operate transparently and efficiently to facilitate access and 

innovation; and

· conducting financial education programs.

Furthermore, the Dodd-Frank Act gave CFPB consumer protection

supervisory authority over certain nondepository institutions, including, 

among others, certain mortgage market participants, private student loan 

lenders, and payday loan lenders.

Page 11 GAO-16-169 Dodd-Frank Regulations

25

The Dodd-Frank Act also established the FSOC to identify risks to the 

financial stability of the United States, promote market discipline, and 

respond to emerging threats to the stability of the U.S. financial system. 

FSOC consists of 10 voting and 5 nonvoting members and is chaired by 

the Secretary of the Treasury. The 10 voting members are the heads of 

Treasury, CFPB, CFTC, Federal Deposit Insurance Corporation (FDIC), 

the Federal Reserve, the Federal Housing Finance Agency (FHFA), 

NCUA, Office of the Comptroller of the Currency (OCC), and SEC, and an 

independent member with insurance expertise. The Dodd-Frank Act also 

established the Office of Financial Research in Treasury to support FSOC 

and its member agencies by improving the quality, transparency, and 

accessibility of financial data and information; conducting and sponsoring 

research related to financial stability; and promoting best practices in risk 

management.26 The director of the Office of Financial Research is a 

nonvoting member of FSOC, along with the director of the Federal 

Insurance Office, and designated state insurance, securities, and banking 

regulators.

 

25The Dodd-Frank Act also gave CFPB supervisory authority over “larger participants” in 

markets for consumer financial products or services as CFPB defines by rule. Pub. L. No. 

111-203, § 1024(a)(1)(B), 124 Stat. 1376, 1987 (2010) (codified at 12 U.S.C § 

5514(a)(1)(B)). Title X also contains additional authorities and responsibilities for CFPB 

that are not outlined here.

26§§ 153-154, 124 Stat. at 1415-18 (codified at 12 U.S.C. §§ 5343-5344). For additional 

information on FSOC and the Office of Financial Research see GAO, Financial Stability 

Oversight Council: Status of Efforts to Improve Transparency, Accountability, and 

Collaboration, GAO-14-873T (Washington, D.C.: Sept. 17, 2014) and Financial Stability: 

New Council and Research Office Should Strengthen the Accountability and 

Transparency of Their Decisions, GAO-12-886 (Washington, D.C.: Sept. 11, 2012).

Financial Stability 

Oversight Council
The Dodd-Frank Act authorizes certain agencies to adopt regulations to 

implement the act’s provisions and, in some cases, gives the agencies 

little or no discretion in deciding how to implement the provisions.

Page 12 GAO-16-169 Dodd-Frank Regulations

27

However, other rulemaking provisions in the act are discretionary in 

nature, stating that (1) certain agencies may issue rules to implement 

particular provisions or that the agencies may issue regulations that they 

decide are “necessary and appropriate,” or (2) agencies must issue 

regulations to implement particular provisions but have some level of 

discretion as to the substance of the regulations. As a result, the agencies 

may decide to promulgate rules for all, some, or none of the provisions, 

and often have broad discretion to decide what these rules will contain. 

Many of the provisions in the Dodd-Frank Act target the largest and most 

complex financial institutions, and regulators have noted that much of the 

act is not meant to apply to community banks. As such, the act exempts 

certain small institutions with $10 billion or less in total assets from a 

number of its provisions and in other provisions authorizes regulators to 

provide smaller institutions with relief in a number of areas. However, the 

act is comprehensive and far-reaching and includes some provisions that 

impose additional requirements on small insured depository institutions. 

In our September 2012 report, we identified Dodd-Frank Act provisions 

expected by federal regulators, state regulatory associations, and industry 

associations to impact community banks and credit unions. Almost 6,200 

(about 98 percent) FDIC-insured banks and thrifts had less than $10 

billion in assets in 2015.28 Of those, almost 61 percent had less than $250 

million in total assets. The vast majority of credit unions had less than $10 

billion in total assets in 2015.29 Furthermore, around 75 percent of the 

credit unions had less than $100 million in total assets.

 

27The Dodd-Frank Act gives several different agencies authority to write rules for various 

provisions—in some cases more than one agency must write implementing rules jointly; in 

other cases a single agency has authority to write rules. See Appendix II.

28Call report data provided by FDIC as of the third quarter 2015.

29GAO analysis of SNL Financial data as of the second quarter, 2015. SNL Financial is a 

private service that aggregates and disseminates data from quarterly regulatory reports, 

among other information. We included commercial banks and thrifts in these data.

Dodd-Frank Act 

Regulations
Several regulatory analysis requirements may apply to independent 

regulators, including the financial regulators. The regulators are subject to 

compliance with various requirements as part of their rulemakings, such 

as those in the Paperwork Reduction Act of 1995 (PRA), the Regulatory 

Flexibility Act (RFA), as amended by the Small Business Regulatory 

Enforcement Fairness Act of 1996, and the CRA.

· PRA requires agencies to minimize the paperwork burden of their 

rulemakings and evaluate whether a proposed collection is necessary 

for the proper performance of the functions of the agency. Under 

PRA, agencies include this analysis in the notice of proposed 

rulemaking and obtain approval for an information collection from the 

OMB.

Page 13 GAO-16-169 Dodd-Frank Regulations

30

· RFA requires that federal agencies consider the impact on small 

entities of certain regulations they issue and, in some cases, 

alternatives to lessen regulatory burden on small entities.31 Although 

RFA, through reference to the Small Business Act, generally defines

the term “small entity,” the statute also sets forth a procedure that 

permits agencies to formulate their own definitions. For example, 

NCUA defines small entities to include federally insured credit unions 

with less than $100 million in assets as opposed to other agencies’ 

reliance on the Small Business Administration’s definition of a small 

depository institution (a commercial bank, thrift, or credit union with 

$550 million or less in total assets) to define a small depository 

institution that falls under that RFA asset threshold.

· In some cases, PRA and RFA also require agencies to assess various 

impacts and costs, respectively, of their rules. However, RFA, like 

PRA, does not require the agencies to conduct formal benefit and cost 

analyses.

· The Small Business Regulatory Enforcement Fairness Act of 1996, 

which amended RFA, generally includes judicial review of compliance 

with certain provisions of RFA and requires agencies to develop one 

or more small entity compliance guides for each rule or group of 

related rules for which the agency must prepare a final regulatory 

 

30Paperwork Reduction Act of 1995, Pub. L. No. 104-13, 109 Stat. 163 (codified as 

amended at 44 U.S.C. §§ 3501-3520).

31Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified as 

amended at 5 U.S.C. §§ 601-612). Under RFA, agencies, including financial regulators, 

generally must prepare a regulatory flexibility analysis in connection with certain proposed 

and final rules, unless the head of the issuing agency certifies that the proposed rule 

would not have a significant economic impact on a substantial number of small entities.

Requirements for 

Regulatory Analyses in 

Rulemaking and 

Retrospective Review
flexibility analysis.

Page 14 GAO-16-169 Dodd-Frank Regulations

32 In addition, when an initial regulatory flexibility 

analysis is required in connection with a proposed rule, covered 

agencies like CFPB must convene a review panel and obtain advice 

and recommendations from representatives of small entities on the 

effects of the proposed rule on small entities.

33 The initial regulatory 

flexibility analyses must describe the number of small entities to which 

the proposed rule would apply, projected reporting and recordkeeping 

requirements of the proposed rule, any significant alternatives to the 

proposed rule which accomplish the stated objectives of applicable 

statutes and which minimize any significant economic impact of the 

proposed rule on small entities, and any projected increase in the cost 

of credit for small entities.

· Under CRA, before rules can take effect, agencies must submit their 

rules to Congress and the Comptroller General, and rules deemed 

major by OMB generally may not become effective until 60 days after 

the rules are submitted.34

In addition to these requirements, authorizing or other statutes require 

certain financial regulators to consider specific benefits, costs, and 

impacts of their rulemakings (see table 2). However, like PRA and RFA, 

none of these authorizing statutes prescribe a benefit and cost analysis 

that includes the identification and assessment of alternatives.

 

32Pub. L. No. 104-121, tit. II, 110 Stat. 847, 857 (codified at 5 U.S.C. § 601 note, §§ 801-

808, 15 U.S.C. § 657).

335 U.S.C. § 609(b).

34Pub. L. No. 104-121, tit. II, § 251, 110 Stat. 847, 868 (1996) (codified at 5 U.S.C. §§ 

801- 808). CRA requires agencies to submit a report to each house of Congress and the 

Comptroller General, before rules can become effective. The report must contain (i) a 

copy of the rule, (ii) a concise general statement relating to the rule, including whether it is 

a major rule, and (iii) the proposed effective date of the rule. 5 U.S.C. § 801(a)(1)(A). 

Rules not classified as major take effect as otherwise provided by law after submission to 

Congress, while rules classified as major take effect on the later of 60 days after Congress 

receives the rule report, or 60 days after the rule is published in the Federal Register, as 

long as Congress does not pass a joint resolution of disapproval. 5 U.S.C. § 801(a)(3),(4). 

CRA also includes a provision that we provide a report to Congress for each major rule 

that includes an assessment of an agency’s compliance with the CRA process. We do not 

analyze or comment on the substance or quality of rulemaking. We must report to each 

house of Congress by the end of 15 calendar days after a rule’s submission or publication 

date. 5 U.S.C. § 801(a)(2)(A).
Table 2: Authorizing and Other Statutes That Apply to Financial Regulators and Their Implications for Benefit-Cost 

Page 15 GAO-16-169 Dodd-Frank Regulations

Considerations

Authorizing or other statute Implications for agency’s consideration of benefits and costs

Commodity Exchange Act The Commodity Futures Trading Commission (CFTC) must consider the benefits and 

costs of its action in light of (1) protection of market participants and the public; (2) 

efficiency, competitiveness, and financial integrity of futures markets; (3) price 

discovery; (4) sound risk-management practices; and (5) other public interest 

considerations.a

Consumer Financial Protection Act of 2010 

(Title X of the Dodd-Frank Act)

The Consumer Financial Protection Bureau (CFPB) must consider the potential benefits 

and costs of its rules to consumers and entities that offer or provide consumer financial 

products and services, including potential reductions in consumer access to products or 

services.b CFPB also must consider the impact of proposed rules on insured depository 

institutions and credit unions with $10 billion or less in assets, and the impacts on 

consumers in rural areas.c CFPB must consult with the appropriate prudential regulators 

or other federal agencies prior to proposing a rule and during the comment process 

regarding consistency with prudential, market or systemic objectives administered by 

such agencies.d When an initial Regulatory Flexibility Act (RFA) analysis is required, 

CFPB must describe any projected increase in the cost of credit for small entities, any 

significant alternatives which accomplish the stated objectives of applicable statutes and 

which minimize any increase in the cost of credit for small entities, and any advice and 

recommendations of small entity representatives related to such projected increase or 

significant alternatives.e

National Securities Markets Improvement 

Act of 1996 and the Securities Exchange 

Act of 1934, as amended

Whenever the Securities and Exchange Commission (SEC) is engaged in rulemaking 

and is required to consider or determine whether an action is necessary or appropriate 

in the public interest, the agency must consider, in addition to the protection of investors, 

whether a rule will promote efficiency, competition, and capital formation.fSEC also 

must consider the impact that any rule promulgated under the Securities Exchange Act 

of 1934 would have on competition.g

Electronic Fund Transfer Act, as amended 

by the Dodd-Frank Act regarding 

reasonable fees and rules for payment card 

transactions

The Board of Governors of the Federal Reserve System must prepare an analysis of the 

economic impact of regulations that considers the benefits and costs to financial 

institutions, consumers, and other users of electronic fund transfers.hThe analysis must 

address the extent to which additional paperwork would be required, the effects on 

competition in the provision of electronic banking service among large and small 

financial institutions, and the availability of such services to different classes of 

consumers, particularly low-income consumers. 

The Riegle Community Development and 

Regulatory Improvement Act of 1994

Each federal banking agency, when determining the effective date and administrative 

compliance requirements of new regulations that impose additional reporting, 

disclosure, or other requirements on insured depository institutions, must consider, 

consistent with the principles of safety and soundness and the public interest, any 

administrative burdens the regulations would place on depository institutions or 

customers of insured depository institutions and the benefits of such regulations.i

Source: GAO.|GAO-16-169

aPub. L. No. 67-331, §15(a), 42 Stat. 998 (1922) (codified as amended at 7 U.S.C. § 19(a)).

bPub. L. No. 111-203, § 1022(b)(2)(A)(i), 124 Stat. 1376, 1980-81 (codified at 12 U.S.C. § 

5512(b)(2)(A)(i)).

c

§ 1022(b)(2)(A)(ii), 124 Stat. at 1980-81 (codified at 12 U.S.C. § 5512(b)(2)(A)(ii)).

d

§ 1022(b)(2)(B), 124 Stat. at 1981 (codified at 12 U.S.C. § 5512(b)(2)(B)).

e

§ 1100G, 124 Stat. at 2112 (codified at 5 U.S.C. § 603(d)) (amending the RFA).

fPub. L. No. 104-290, § 106(a)-(c), 110 Stat. 3416, 3424 (1996) (codified as amended at 15 U.S.C. §§ 

77b(b), 78c(f), 80a-2(c)). Conforming amendments to the Investment Advisers Act of 1940 were 
made in section 224 of the Gramm-Leach-Bliley Act..Pub. L. No. 106-102, § 224, 113 Stat. 1338, 

1402 (1999) (codified at 15 U.S.C. § 80b-2(c)).

gPub. L. No. 73-291, § 23(a)(2), 48 Stat. 881 (codified as amended at 15 U.S.C. § 78w(a)(2)).

h

15 U.S.C. § 1693b(a)(2)(B).

iPub. L. No. 103-325, § 302, 108 Stat. 2160, 2214 (codified at 12 U.S.C. § 4802).

In contrast, E.O. 12,866, supplemented by E.O. 13,563, requires 

executive agencies (which do not include independent regulators such as 

financial regulators), to the extent permitted by law and where applicable, 

to provide more formal cost-benefit analyses that (1) assess costs and 

benefits of available regulatory alternatives and (2) include both 

quantifiable and qualitative measures of benefits and costs in their 

analysis, recognizing that some costs and benefits are difficult to quantify. 

Such analysis, according to OMB, can enable an agency to learn if the 

benefits of a rule are likely to justify the costs and discover which possible 

alternatives would yield the greatest net benefit or be most cost-effective.

In 2003, OMB issued Circular A-4 to provide guidance to executive 

agencies on developing regulatory analysis as required by E.O.12,866.

Page 16 GAO-16-169 Dodd-Frank Regulations

35

The circular defines good regulatory analysis as including a statement of 

the need for the proposed regulation, an assessment of alternatives, and 

an evaluation of the costs and benefits of the proposed regulation and the 

alternatives. It also standardizes the way costs and benefits of regulatory 

actions should be measured and reported. FSOC and Treasury are 

subject to E.O. 12,866 and Circular A-4. However, as we have reported, 

some independent agencies consult Circular A-4 and some have revised 

their internal rulemaking guidance to more fully incorporate OMB’s 

regulatory analysis guidance as we had recommended in our 2011 report 

on Dodd-Frank Act regulation.36

 

35Office of Management and Budget, Circular A-4: Regulatory Analysis (Washington, 

D.C.: Sept. 17, 2003). Circular A-4 replaced OMB’s best practices guidance issued in 

1996 and 2000. E.O. 13,579 encourages independent regulatory agencies to comply with 

E.O. 13,563. E.O. 13,579, 76 Fed. Reg. 41,587 (July 11, 2011).

36GAO-12-151. We recommended that federal financial regulators more fully incorporate 

OMB’s regulatory analysis guidance into their rulemaking policies. As a result of actions 

taken, we have closed this recommendation with CFPB, FDIC, OCC, and SEC but not 

other agencies. Independent regulatory agencies are defined by 44 U.S.C. § 3502(5), 

which the Dodd-Frank Act revised to include OCC, CFPB, and the Office of Financial 

Research.
The Economic Growth and Regulatory Paperwork Reduction Act of 1996 

(EGRPRA) requires OCC, FDIC, and the Federal Reserve, along with the 

FFIEC, to review their regulations at least every 10 years to identify 

outdated, unnecessary, or unduly burdensome regulations and consider 

how to reduce regulatory burden on insured depository institutions.

Page 17 GAO-16-169 Dodd-Frank Regulations

37 The 

report from the first EGRPRA review was submitted to Congress in 2007 

and the second review is underway.38 The agencies anticipate completing 

the current EGRPRA review by the end of 2016. NCUA conducts a 

voluntary review of its regulations on the same cycle and in a manner 

consistent with the EGRPRA review. Additionally, per NCUA’s internal 

policies, NCUA conducts a review of all of its regulations every 3 years 

and produces a non-binding memo for its board with suggestions on rules 

that should be revised or streamlined. In a process separate from 

EGRPRA, CFPB must conduct an assessment of its significant 

regulations and publish a report of its review 5 years after the regulations 

take effect.39

In the Federal Register releases of the 26 Dodd-Frank Act rules that we 

identified and reviewed, the issuing federal agencies conducted the 

regulatory analyses required by RFA and PRA. The agencies also 

addressed key elements in OMB’s Circular A-4 for six of the rules that 

were identified to be major, that is, they resulted or are likely to result in 

an annual impact on the economy of $100 million or more, a major 

increase in costs or prices, or significant adverse effects on competition, 

employment, investment, productivity, innovation, or on the ability of U.S.-

based enterprises to compete with foreign-based enterprises in domestic 

or export markets. Additionally, federal agencies reported coordinating on 

11 of the 26 rules and were not required to coordinate for the remaining 

15 rules.

 

37Pub. L. No. 104-208, § 2222, 110 Stat. 3009, 3009-414 (codified at 12 U.S.C. § 

3311(a)). 

38Joint Report to Congress, July 31, 2007; Economic Growth and Regulatory Paperwork 

Reduction Act, 72 Fed. Reg. 62,036 (Nov. 1, 2007).

3912 U.S.C. § 5512(d). 

Agencies Conducted 

Required Regulatory 

Analysis and Reported 

Coordinating as 

Required on DoddFrank Act Rulemakings
Of the 26 Dodd-Frank Act rules in our scope, 15 were substantive—

generally subject to public notice and comment under APA—and also 

required some form of regulatory analysis. These rules were issued 

individually or jointly by CFPB, CFTC, FDIC, the Federal Reserve, FHFA, 

Department of Housing and Urban Development (HUD), NCUA, OCC, 

SEC or Treasury. (See app. II for a list of the regulations in our review).

In examining the regulatory analyses the agencies reported they 

conducted for the 15 substantive rules, we found the following:

· Agencies conducted the required regulatory analyses. All the 

agencies we reviewed conducted the regulatory analyses pursuant to 

RFA for their Dodd-Frank Act rules, when required or applicable. For 

example, in the final regulatory flexibility analysis for its rule on 

Nationally Recognized Statistical Rating Organizations, SEC identified 

significant issues raised by public comments and included responses; 

it further determined that small entities may be affected by the rule 

and identified actions it took to minimize the effect on small entities.

Page 18 GAO-16-169 Dodd-Frank Regulations

40

The Federal Reserve conducted the flexibility analysis for two of the 

final rules it issued, although the agency determined that the rules

would not have a significant economic impact on a substantial number 

of small entities. All of the agencies also conducted the analyses 

required under PRA when required or applicable.

· Agencies issued 6 major rules and addressed key elements in OMB’s 

Circular A-4 for these rules. Of the 15 substantive rules, OMB 

identified 6 as major rules under CRA. Specifically, SEC issued 5 

major rules, and the Federal Reserve, FDIC, FHFA, HUD, OCC, and 

SEC jointly issued one major rule. Based on our review of all 6 

rulemakings, the regulators identified the problems to be addressed 

by the rule, the potential benefits and costs, the baseline against 

which they assessed benefits and costs, and the regulatory alternative 

approaches they considered. They asked for and received public 

comments on alternatives for all 6 rulemakings. In 4 rulemakings, the 

regulators quantified the costs; in the 2 cases in which they did not 

quantify costs, regulators provided reasons why they did not quantify 

them. Regulators did not quantify benefits for all 6 major rules 

 

40Nationally Recognized Statistical Rating Organizations, 79 Fed. Reg. 55,078 (Sept. 15, 

2014).

Agencies Conducted 

Required Regulatory 

Analyses
because the benefits were qualitative or the economic benefits were 

difficult to quantify.

Page 19 GAO-16-169 Dodd-Frank Regulations

41

The rulemaking agencies coordinated as required by the Dodd-Frank Act 

for 11 of the 26 regulations we reviewed (see app. III). For the remaining 

15 of the 26 rules, the agencies were not required by the Dodd-Frank Act 

to coordinate. We reviewed the rulemakings to document evidence of 

required coordination among the agencies and found the following:

· On three of SEC’s rulemakings related to swaps, the agency reported 

that it coordinated with CFTC and the prudential regulators pursuant 

to Title VII of the Dodd-Frank Act. SEC also reported coordinating with 

foreign regulators on these rules through bilateral and multilateral 

discussions.

· On five of CFPB’s rulemakings, the agency reported that it consulted, 

or offered to consult with, the prudential regulators and other agencies 

pursuant to section 1022 of the Dodd-Frank Act. CFPB staff we spoke 

with stated that CFPB met with agencies to coordinate on the rules.

· Several agencies jointly issued two of the rulemakings as required by 

the act. OCC, Federal Reserve, FDIC, FHFA, SEC, and HUD jointly 

issued a rule on credit risk retention.42 Additionally, CFPB, OCC, and 

the Federal Reserve jointly issued a rule on appraisals for higherpriced mortgage loans.43

· The Federal Reserve reported that it consulted with CFTC, FSOC, 

and SEC for its rule on financial market utilities as required by the act.

44

 

41In our December 2014 report, we reported that regulators were constrained by several 

factors in their analyses, including limited data or data availability and difficulties modeling 

and quantifying costs and benefits (GAO-15-81).

42See Credit Risk Retention, 79 Fed. Reg. 77,602 (Dec. 24, 2014). 

43See Appraisals for Higher-Priced Mortgage Loans Exemption Threshold Adjustment, 79 

Fed. Reg. 78,296 (Dec. 30, 2014). A higher-priced mortgage loan generally means a 

closed-end loan secured by the consumer’s principal dwelling with an annual percentage 

rate that exceeds the average prime offer rate for a comparable transaction as of the date 

the interest rate is set by a certain amount of percentage points, depending on the type of 

loan. 12 C.F.R. § 1026.35(a)(1). An average prime offer rate is an annual percentage rate 

that is derived from average interest rates and certain other loan pricing terms of low-risk 

mortgages. 12 C.F.R. § 1026.35(a)(2). 

44See Financial Market Utilities, 79 Fed. Reg. 65,543 (Nov. 5, 2014). 

Agencies Reported 

Coordinating as Required on 

Dodd-Frank Act 

Rulemakings
Most of the agencies stated that they did not encounter any significant 

challenges in coordination and that they have continued to consult and 

coordinate with each other.

Representatives of community banks and credit unions and industry 

associations with whom we spoke noted an increased compliance burden 

associated with implementation of Dodd-Frank Act rules. The Dodd-Frank 

Act includes numerous reforms to strengthen oversight of financial 

services firms and consolidate certain consumer protection 

responsibilities within CFPB. In our September 2012 report, we concluded 

that some provisions, such as the deposit insurance reforms and CFPB 

supervision of nonbank providers of financial services products, have 

benefitted or may benefit community banks and credit unions. However, 

we noted that other provisions—such as some of the act’s mortgage 

reforms—could negatively affect them depending in part on how 

regulators implement such provisions and exercise their exemption 

authority. Some credit union, community bank, and industry association 

representatives said several of the mortgage-related rules have increased 

their overall compliance burden, such as increases in staff and training. 

Additionally, some said these rules had begun to adversely affect some 

lending activities, such as mortgage lending to customers not typically 

served by larger financial institutions, even though CFPB provided 

exemptions or other provisions to reduce such impacts. The results of 

surveys conducted by regulators, industry associations, and academics 

on the impact of the Dodd-Frank Act on small banks suggest that there 

have been moderate to minimal initial reductions in the availability of 

credit among those responding to the various surveys, and regulatory 

data to date have not confirmed a negative impact on mortgage lending. 

Some community bank, credit union, and industry association 

representatives also identified the impact of nonmortgage-related 

requirements on business activities. 

Regulators told us that it may be too early to assess the full impact of the 

Dodd-Frank Act rulemakings and while they have heard concerns about 

an increase in compliance burden, they have not been able to quantify 

compliance costs. Regulators also said that they are aware of industry 

concerns about the potential for unintended impacts from Dodd-Frank Act 

rulemaking and implementation. Regulators are currently engaged in

retrospective reviews of rules. In addition, we developed indicators which, 

when monitored over time, may be suggestive of impact of the regulations 

on community banks and credit unions.

Page 20 GAO-16-169 Dodd-Frank Regulations

Community Banks and 

Credit Unions Cited a 

Cumulative Compliance 

Burden Associated 

with Dodd-Frank Act 

Rules
CFPB’s implementation of mortgage-related rules imposes additional 

requirements on community banks and credit unions. In September 2012, 

we reported that mortgage reform provisions are expected to impose 

additional burdens on a large percentage of community banks and credit 

unions. In particular, some regulators and industry representatives 

expected the reforms to lead smaller institutions to decrease certain 

lending activities, or, at the extreme, exit the mortgage business. 

However, we also concluded that the full burden on the entities would 

depend on the extent to which CFPB (and other agencies) exercised its 

authority, where available, to exempt small institutions from any 

regulations and how it implemented provisions to provide more limited 

relief to small institutions, particularly those in rural or underserved 

communities.

Page 21 GAO-16-169 Dodd-Frank Regulations

45

Since our 2012 report, CFPB issued mortgage-related rules pursuant to 

Titles X and XIV of the Dodd-Frank Act that became effective by October 

2015. Many of these rules amended Regulation X, which implements the 

Real Estate Settlement Procedures Act (RESPA) of 1974 and Regulation 

Z, which implements the Truth in Lending Act (TILA). Representatives 

from credit unions, community banks, and industry associations we 

interviewed said several of these new rules have increased their overall 

compliance burden—training staff, allocating time for regulatory 

compliance matters, and updating compliance systems—and in some 

cases, have begun to affect mortgage lending. These rules include new 

disclosure requirements, minimum standards for mortgage loans, and 

new requirements related to escrow accounts and appraisals for higherpriced mortgage loans and mortgage servicing (see table 3).

Table 3: Select Mortgage Rules under the Dodd-Frank Act Effective by October 2015—General Rule Descriptions, Applicable 

Exemptions, and Effective Dates

Agency and final rule Rule descriptions, applicable exemptions, and effective dates

Consumer Financial Protection Bureau 

(CFPB), Integrated Mortgage Disclosures

Under the Real Estate Settlement 

Procedures Act (Regulation X) and the 

Truth in Lending Act (Regulation Z), 78 

The rule consolidates closed-end mortgage disclosures required under the Truth in 

Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) of 1974 into two 

forms: a loan estimate form that must be delivered or placed in the mail no later than the 

third business day after receiving the loan application and a closing disclosure form that 

must be received by the consumer 3 business days before consummation (when the 

 

45The Dodd Frank Act and certain federal consumer financial laws provide CFPB with the 

authority to exempt covered persons or transactions from certain CFPB rules. See, e.g.,

Pub. L. No. 111-203, § 1022(b)(3), 124 Stat. 1376, 1981 (2010); § 1071, 124 Stat. at 

2058; § 1461, 124 Stat. at 2179.

Industry Officials Reported 

Mortgage-Related Rules 

Generally Increased 

Compliance Burden
Page 22 GAO-16-169 Dodd-Frank Regulations

Agency and final rule Rule descriptions, applicable exemptions, and effective dates

Fed. Reg. 79,730 (Dec. 31, 2013) (TRID 

rule)

consumer becomes contractually obligated to the creditor on the loan). The rule became 

effective on October 3, 2015.

Exemptions: Applicable to all creditors as defined by Regulation Z. Lenders that do not 

regularly extend consumer credit as defined in the regulation are not included in that 

definition. Some types of loan transactions are also exempt from the TRID rule, but 

creditors may have to provide different disclosures under Regulation Z and Regulation X.

CFPB, Ability-to-Repay and Qualified 

Mortgage Standards Under the Truth in 

Lending Act (Regulation Z), 78 Fed. Reg. 

6,408 (Jan. 30, 2013)(ATR/QM rule)

Lenders making closed-end loans must make a reasonable, good faith determination of 

the borrower’s ability to repay the loan. This ability-to-repay determination requires 

lenders to meet minimum underwriting standards, including consideration and verification 

of a borrower’s income or assets, debt, and credit history. Lenders are presumed to meet 

the ability-to-repay requirement when they make a qualified mortgage, which is a loan that 

meets specific product feature and underwriting criteria. The rule, which became effective 

on January 10, 2014, sets out several categories of qualified mortgage: general, 

temporary and small creditor.

· The general category includes loans to borrowers with a total monthly debt-to-income 

ratio of 43 percent or less and that otherwise meet the restrictions on product 

features, points and fees, and other underwriting requirements.

· The temporary category, to be phased out as relevant federal agencies issue their 

own qualified mortgage rules and within seven years, generally consists of loans that 

meet the restrictions on product features and points and fees, and that are eligible for 

purchase, insurance, or guarantee by certain entities, including Fannie Mae, Freddie 

Mac, U.S. Department of Agriculture or its Rural Housing Service. The Federal 

Housing Administration and U.S. Department of Veterans Affairs issued their own 

qualified mortgage rules; the Rural Housing Service has published a proposed rule. 

Qualified mortgages under the temporary category are not subject to a specific debtto-income ratio.

· The small creditor category generally consists of loans that meet the restrictions on 

product features and points and fees. Although creditors must consider and verify the 

borrower’s debt-to-income ratio, these loans are not subject to a specific debt-toincome ratio. These loans must be made by small creditors and generally held in 

portfolio for at least 3 years. Small creditors are generally creditors that have less 

than $2 billion in assets (adjusted annually for inflation) and together with their 

affiliates originated no more than 500 first-lien mortgage loans in the preceding year. 

Certain small creditors operating in rural or underserved areas can also originate 

qualified mortgages with balloon payments, a risky loan feature otherwise not 

permitted for a qualified mortgage, as long as the loans meet specific underwriting 

criteria. Qualified mortgages originated by small creditors also generally have 

different, higher thresholds for when they are considered higher-priced than other 

qualified mortgages. On September 21, 2015, CFPB finalized rules, Amendments 

Relating to Small Creditors and Rural or Underserved Areas Under the Truth in 

Lending Act (Regulation Z), 80 Fed. Reg. 59,944 (Oct. 2, 2015), which revised 

Regulation Z criteria for small creditors and rural areas, and made technical changes 

and clarifications to other sections of Regulation Z and the related commentary. 

These changes are effective January 2016.

Exemptions: See above for a description of several limitations in the rule’s scope based 

on categories of qualified mortgages, as applicable.

CFPB, Escrow Requirements Under the 

Truth in Lending Act (Regulation Z), 78 

Fed. Reg. 4,726 (Jan. 22, 2013) (TILA 

Higher-Priced Mortgage Loans Escrow)

In general, lenders that originate a first-lien higher-priced mortgage loan must establish 

and maintain an escrow account until the earlier of: (1) termination of the debt obligation 

or (2) receipt of the consumer’s request to cancel the escrow account at least five years 

after consummation. The rule became effective on June 1, 2013.

Exemptions: Covered higher-priced mortgage loans made by certain small creditors 
Page 23 GAO-16-169 Dodd-Frank Regulations

Agency and final rule Rule descriptions, applicable exemptions, and effective dates

(same asset threshold and loan cap as ATR/QM rule, in addition to other criteria) that

operate in rural or underserved areas and that generally do not otherwise escrow are 

exempt as long as loans are not subject to forward commitments for sale to nonexempt 

creditors. 

CFPB, Board of Governors of the Federal 

Reserve System (Federal Reserve), 

Federal Deposit Insurance Corporation

(FDIC), Federal Housing Finance Agency

(FHFA), Office of Comptroller of the 

Currency (OCC), and National Credit 

Union Administration (NCUA), Appraisals 

for Higher-Priced Mortgage Loans, 78 

Fed. Reg. 10,368 (Feb. 13, 2013); 

Appraisals for Higher-Priced Mortgage 

Loans, 78 Fed. Reg. 78,520 (Dec. 26, 

2013)a

For higher-priced mortgage loans, creditors must obtain an independent appraisal 

conducted by a licensed or certified appraiser who physically views the property interior 

and produces a written report, provides a disclosure within 3 days of application on 

consumers’ rights with regard to the appraisal, and gives consumers a free copy of the 

appraisal report at least 3 days before transaction consummation. If timing and pricing 

requirements are triggered, creditors must obtain two independent appraisers for higherpriced mortgage loans.

b

The rule became effective on January 18, 2014 and compliance 

with provisions regarding manufactured home loans became mandatory starting July 18, 

2015.

Exemptions: Transactions for which creditors are not subject to this rule include, among 

others, mortgage loans of $25,000 or less (adjusted annually for inflation). Creditors of 

certain manufactured home loans are exempt from the requirement to obtain an appraisal, 

but alternative requirements may apply. The requirement to obtain two appraisals under 

certain timing and pricing requirements have several exemptions, including higher-priced 

mortgage loans secured by properties in rural counties (same definition of “rural county” 

as in ATR/QM rule).

CFPB, Mortgage Servicing Rules Under 

the Real Estate Settlement Procedures 

Act (Regulation X), 78 Fed. Reg. 10,696 

(Feb. 14, 2013); Mortgage Servicing 

Rules Under the Truth in Lending Act 

(Regulation Z), 78 Fed. Reg. 10,902 (Feb. 

14, 2013)

The final rule under RESPA addresses mortgage servicers’ obligations to, among other 

requirements, respond to written notices of error received from borrowers; provide certain 

information requested by borrowers in writing; provide protections to borrowers in 

connection with forced-placed insurance; establish and implement certain reasonable 

policies and procedures; provide certain information relating to loss mitigation options; 

follow certain procedures when evaluating loss mitigation applications; and establish 

policies and procedures with respect to continuity of contact with servicer personnel.

The final rule under TILA addresses, among other requirements, initial rate adjustment 

notices for adjustable-rate mortgages; periodic statements for certain residential mortgage 

loans; prompt crediting of mortgage payments; and responses to requests for payoff 

amounts. It also amends rules on scope, timing, content, and format of disclosures to 

consumers about interest rate adjustments. The rule became effective on January 10, 

2014.

Exemptions: Small servicers (including, in general, those that with their affiliates service 

5,000 or fewer mortgages for which they or their affiliates are the creditors or assignees) 

are exempt from parts of the rule.

Source: GAO analysis of CFPB documents. | GAO-16-169

aCFPB, Federal Reserve, and OCC versions of the appraisal rules and corresponding official 

interpretations are substantially identical; the FDIC, NCUA, and FHFA adopted CFPB’s version of the 

regulations. 

b

Two appraisals are required if the seller acquired the property within a certain timeframe (e.g.,180 

days or less prior to the consumer’s agreement to acquire) and the consumer’s acquisition price is 

more than a certain percentage of the seller’s acquisition price. 12 C.F.R. § 1026.35(c)(4)(i).

CFPB’s integrated mortgage disclosure rule implementing requirements 

in the Dodd-Frank Act, known as TILA-RESPA Integrated Disclosures 

(TRID), combines certain disclosures that consumers receive in 

connection with applying for and closing on a mortgage loan. The 

purpose of the integrated disclosure is to facilitate compliance with the 

Integrated Mortgage 

Disclosures 
disclosure requirements of TILA and RESPA and to help the consumer 

understand the transaction by using plain language for the disclosures.

Representatives from community banks, credit unions, and industry 

associations we interviewed and CFPB stated that the compliance costs 

incurred by community banks and credit unions to implement the new 

disclosures included costs to revise and test software and compliance 

systems and costs to train employees. Representatives from two

community banks and four credit unions we interviewed stated that they 

had to work with third-party vendors to update their loan origination and 

documentation system software. CFPB stated in its analysis of the final 

rule that the one-time cost of updating software largely would fall on 

software vendors because a majority of creditors rely on these vendors.

Page 24 GAO-16-169 Dodd-Frank Regulations

46

The CFPB analysis also stated that many vendor contracts are structured 

in a way that vendors would not be able to pass through any cost 

increase due to a regulation-related software update such as this one. 

However, representatives from one community bank and one credit union 

indicated that they had to retain a new vendor to comply with the rules. 

Representatives from one community bank and one credit union also 

stated that they have to conduct additional due diligence on their vendors 

to ensure compliance because they are ultimately held liable if the 

vendors’ systems or disclosures are not compliant with the rule. As part of

quality assurance, they have to test the vendors’ new systems prior to 

implementation. Representatives from ICBA and CUNA stated that some 

entities would not have adequate time to test the software for compliance 

before the effective date of the rule due to delays by third-party service 

providers. CFPB and the other FFIEC member agencies stated in their 

letters to industry associations that during initial examination for 

compliance with TRID, the agencies’ examiners will expect the 

supervised entities to make good faith efforts to comply with the rule’s 

requirements in a timely manner. The agencies stated that during early 

examinations, examiners will consider an institution’s implementation 

plan, including actions taken to update policies, procedures, and 

processes; its training of appropriate staff; and its handling of early 

technical problems or other implementation challenges. In October 2015, 

FDIC and the Federal Reserve issued a Financial Institution Letter and 

 

46See Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act 

(Regulation X) and the Truth in Lending Act (Regulation Z), 78 Fed. Reg. 79,730, 80,076 

(Dec. 31, 2013). 
guidance, respectively, on their approach to early supervision.

Page 25 GAO-16-169 Dodd-Frank Regulations

47 CFPB 

also issued a press release on the regulators’ approach. 

Representatives from several community banks and credit unions also 

said that they had to train their staff on TRID, including familiarizing them 

with the new forms. A representative from one community bank

association stated that compared with larger institutions, community bank

staff have to take on more compliance duties and the community banks

may decide to stop offering certain products in order to minimize 

compliance risk. A representative from a community bank state 

association stated that community banks may exit the market due to the 

costs and time allocated to comply. Furthermore, representatives from 

one community bank and one credit union state association indicated that 

the new TRID requirements could lengthen the closing process and result 

in potential closing delays related to meeting these requirements. CFPB 

also recognized this potential impact in its final rulemaking analysis.

Representatives from credit unions, community banks, and industry 

associations we spoke with said that CFPB’s Ability to Repay and 

Qualified Mortgage Standards (ATR/QM) rule could affect mortgage 

lending activities of credit unions and community banks, particularly 

lending to customers who otherwise might not be served by larger 

lenders.48 However, agency data thus far have not reflected such 

changes. The Dodd-Frank Act amended TILA to generally prohibit 

 

47Federal Deposit Insurance Corporation, Financial Institution Letter FIL-43-2015, 

Supervisory Expectations for Financial Institutions Implementing the Truth in Lending Act 

(Regulation Z) and the Real Estate Settlement Procedures Act (Regulation X) Integrated 

Disclosure Rule, (Washington, D.C. Oct. 2, 2015); The Board of Governors of the Federal 

Reserve System, Supervisory Expectations for Supervised Institutions Regarding the 

TILA-RESPA Integrated Disclosure Rule (Washington, D.C., Oct. 21, 2015). 

48Community banks and credit unions traditionally have allocated a greater percentage of 

their lending to small businesses and rural areas than large banks due to their focus on 

relationship lending, in which they rely on relationships with customers and local 

knowledge to make loans that larger banks may not make due to their reliance on more 

automated processes. In prior work, we noted that large banks are more likely to engage 

in transactional banking, which focuses on the provision of highly standardized products 

that require little human input to manage and are underwritten using “hard” statistical 

information. Small banks (particularly those with less than $1 billion in assets) are more 

likely to engage in relationship banking, which involves more one-on-one interaction with 

customers. In relationship banking, banks consider not only hard information, but also 

“soft” information that is not readily available or quantifiable and is acquired primarily by 

working with the customer. GAO, Financial Institutions: Causes and Consequences of 

Recent Bank Failures,GAO-13-71 (Washington, D.C.: Jan. 3, 2013).

Ability to Repay and Qualified 

Mortgage Standards 
lenders from making mortgage loans unless the lender makes a 

reasonable and good faith determination based on verified and 

documented information that the consumer has a reasonable ability to 

repay the loan. In its final rule, CFPB identified eight underwriting factors 

a creditor must consider in relation to making the required good faith 

determination of a borrowers’ ability to repay, such as current 

employment status and monthly debt-to-income ratio. A creditor 

presumably satisfies the ability-to-repay requirement by making a 

qualified mortgage, which meets certain underwriting requirements and 

restrictions on product features and points and fees. CFPB sets out three 

main categories of qualified mortgages that are presumed to comply with 

the ability-to-repay requirements: general, temporary, and small creditor 

(see table 3). Creditors that make qualified mortgages receive some 

protection from liability—a safe harbor, or in cases of higher-priced loans, 

a rebuttable presumption that ability-to-repay requirements have been 

met.

Page 26 GAO-16-169 Dodd-Frank Regulations

49

CFPB included special provisions in the final rule for small creditors, 

which during our review were defined as those creditors with less than $2 

billion in assets (adjusted annually for inflation) that, together with their 

affiliates, originated no more than 500 first-lien mortgage loans in the 

preceding year. For loans that are not sold and kept in their portfolios, 

such creditors must meet some restrictions on qualified mortgages loans, 

such as points and fees, but are not subject to a specific debt-to-income 

ratio and are permitted a higher interest rate threshold for a safe harbor. 

Certain small creditors operating in rural or underserved areas can also 

originate mortgages with balloon payments, a risky loan feature otherwise 

not permitted for a qualified mortgage.

Representatives from some community banks and credit unions as well 

as industry associations we interviewed stated that the ATR/QM rule has 

negatively affected mortgage lending, particularly for mortgages that do 

not meet the criteria for qualified mortgages. For example, 

representatives from some community bank and credit union associations 

and one credit union said they were unwilling to make loans that are not 

 

4912 C.F.R. § 1026.43(e)(1). Under the rebuttable presumption, lenders are still presumed 

to have satisfied the ability-to-repay-requirements, but borrowers can generally rebut the 

presumption by proving that based on information available to the lender at loan 

consummation, the borrower would not have enough income left for living expenses after 

paying the mortgage and other debts. 12 C.F.R. § 1026.43(e)(1)(ii)(B).
qualified mortgages because they may not benefit from the liability 

protection afforded qualified mortgages and borrowers may hold lenders 

liable for making mortgage loans that they cannot repay. Representatives 

from two community banks said that many banks have been unwilling to 

originate loans that cannot be sold on the secondary market.

Page 27 GAO-16-169 Dodd-Frank Regulations

50

Representatives from one community bank and one credit union we 

spoke with said that investors will not purchase loans that are not 

qualified mortgages, such as those that do not meet the debt-to-income 

requirement. A 2015 survey of community banks conducted by the 

Conference of State Bank Supervisors and state regulators found that 

about a third of the 974 state-chartered commercial banks that responded 

said that they will only make loans that are not qualified mortgages on an 

“exception” basis; additionally, about a third of the respondents did not 

intend to make any loans that are not qualified mortgages.51

Representatives from several industry associations and community banks 

told us that those most likely to be affected by community banks 

originating only qualified mortgages are borrowers on the margins of 

meeting qualified mortgage standards, or those that would not meet the 

underwriting standards at large banking institutions because they were 

self-employed, did not have steady income, or were buying in an area 

with a lack of comparable sales of similar properties. Representatives 

from CUNA and one state community bank association told us that 

CFPB’s current rural or underserved area exemption is too narrow and as 

a result has limited the ability to lend to those potential borrowers. 

 

50After making loans, the originating lender can retain loans in portfolio or sell them to 

investors on the secondary market, either as whole loans to other financial institutions or 

(directly or indirectly through other financial institutions) as loan pools that are held in trust 

and administered by a trustee. The loan pools become asset-backed securities that are 

issued and sold to investors and are referred to as mortgage-backed securities. The 

financial institutions that buy these loans include Fannie Mae and Freddie Mac, private 

institutions approved by Ginnie Mae, and other private institutions that issue securities 

under their own authority.

51Federal Reserve and Conference of State Bank Supervisors, Community Banking in the 

21st Century, Opportunities and Challenges (St. Louis, MO.: 2015). The survey was 

conducted between April 17, 2015 and July 15, 2015 and relied on a convenience sample 

(a type of nonprobability sample) of state-chartered commercial banks with assets less 

than $10 billion. The survey was distributed by state bank commissioners directly to these 

banks. Although it is unknown exactly how many institutions received the questionnaire, 

about 974 (24 percent) institutions of a total of 4,095 state chartered banks responded. 

Because the survey relied on a non-probability sample, the results cannot be used to 

make inferences about all commercial banks. 
Additionally, while survey results cannot be generalized to all banks, an 

ICBA survey found that about two thirds of the 519 responding community 

banks in the $500 million to $2 billion asset range made too many loans 

to qualify as small creditors under CFPB’s current rural and underserved 

area exemption.

Page 28 GAO-16-169 Dodd-Frank Regulations

52 Moreover, about half of the banks responding to this 

survey that serve rural areas did not qualify for the rural exception. In 

response to concerns expressed by the industry, CFPB amended the 

regulatory criteria for small creditor in September 2015 to raise the limit 

for small creditors and their affiliates from 500 first-lien mortgages in the 

preceding year to 2,000, excluding loans that are held in portfolio, and 

expanded the definitions of rural and underserved areas.53 The rule will 

be effective on January 1, 2016. According to CFPB, the revised small 

creditor criteria will effectively expand the overall number of creditors that 

are eligible to extend small creditor portfolio-qualified mortgages. 

Additionally, CFPB estimated that the number of rural small creditors will 

increase from about 2,400 to about 4,100. The final rule retains the asset 

 

52Independent Community Bankers of America, 2014 ICBA Community Bank Lending 

Survey, Executive Summary, (Washington, D.C.: January 2015). The survey was 

conducted between September and October of 2014. It was emailed to 6,500 community 

banks and 519 responded for a response rate of 8 percent overall. Since the survey relies 

on a non-probability sample, the results cannot be used to make inferences about all 

community banks. 

53Amendments Relating to Small Creditors and Rural or Underserved Areas Under the 

Truth in Lending Act (Regulation Z), 80 Fed. Reg. 59,944 (Oct. 2, 2015).The rule 

expanded the definition of “rural area” to generally include either: a county that meets the 

current definition of a rural county or a census block that is not in an urban area as defined 

by the U.S. Census Bureau. Previously, only counties were included in the rural area 

definition. A county is rural during a calendar year if it is not in a metropolitan statistical 

area nor in a micropolitan statistical area adjacent to a metropolitan statistical area, as 

those terms are defined by the OMB and as they are applied under currently applicable 

Urban Influence Codes, established by the U.S. Department of Agriculture’s Economic 

Research Service. 12 C.F.R. § 1026.35(b)(2)(iv)(A). A county is “underserved” if, in the 

preceding calendar year’s public Home Mortgage Disclosure Act aggregate dataset, no 

more than two creditors have reported five or more first-lien covered transactions with 

Home Mortgage Disclosure Act geocoding that places the properties in that county. The 

final rule additionally reduced the time period relating to determining the creditor’s 

operation in rural or underserved areas from any of the three preceding calendar years to 

the preceding calendar year. 12 C.F.R. § 1026.35(b)(2)(iv)(B).
limit used to determine small creditor status, but was updated to generally 

include the assets of certain affiliates.

Page 29 GAO-16-169 Dodd-Frank Regulations

54

In our June 2015 report on mortgage reforms, we found that studies that 

were conducted or posted after the implementation of the ATR/QM rule 

anticipated or suggested moderate to minimal initial reductions in the 

availability of credit and willingness to originate loans that are not 

qualified mortgages.55 However, we also found that the ATR/QM rule 

would have limited initial impacts on mortgage lending activities because 

most loans originated in recent years largely conformed with qualified 

mortgage criteria and because not all loans that qualify as qualified 

mortgages are subject to the same restrictions.56 According to a 

November 2015 Federal Reserve report examining 2014 data collected 

under the Home Mortgage Disclosure Act, there is little indication that the 

ATR/QM rules significantly curtailed mortgage credit availability in 2014 

relative to 2013.57 For example, despite the ATR/QM rule that caps 

borrowers’ debt-to-income ratio for many loans, the fraction of high debtto-income loans does not appear to have declined in 2014 from 2013. 

However, the report also stated that the results here do not necessarily 

rule out the possibility that effects may arise in the future. Additionally, 

FDIC stated that FDIC’s data do not appear to confirm a large negative 

effect of the rule on small banks. In early 2014, FDIC introduced a new 

Community Bank Performance section to the FDIC Quarterly Banking 

Profile that is intended to monitor the health of community banks. In the 

aggregate, these profiles showed that community banks’ one-to-four 

 

54The rule retains the asset limit of $2 billion, adjusted annually (e.g., total assets of less 

$2,060,000,000 on December 31, 2014 for determining small creditor status in 2015), but 

will require that the creditor count not only its assets in the preceding year but also the 

assets of any affiliate that regularly extended first-lien covered transactions in the 

preceding calendar year. See 80 Fed. Reg. 59,944. A grace period may also be available, 

which is determined in part by calculating assets in the calendar year preceding that year.

55GAO, Mortgage Reform: Actions Needed to Help Assess Effects of New Regulations, 

GAO-15-185 (Washington, D.C.: June 25, 2015).

56GAO-15-185. However, we did not conduct a prospective analysis on the impacts that 

could potentially materialize once loans that were not qualified mortgages were originated. 

A more rigorous analysis would incorporate, among other things, the effect the rule may

have on nonqualified mortgage loan origination, which may affect banks by constraining 

activity in this area.

57Neil Bhutta, Jack Popper, and Daniel R. Ringo, Federal Reserve Bulletin, The 2014 

Home Mortgage Disclosure Act Data, vol. 101, no. 4 (November 2015).
family residential mortgage loan balances have grown in 2014 and 

2015.

Page 30 GAO-16-169 Dodd-Frank Regulations

58

Representatives from some community banks, credit unions, and industry 

associations with whom we spoke noted increased compliance costs 

associated with CFPB’s new rules related to escrow accounts, appraisals 

for higher-priced loans, and mortgage servicing.

· Escrow Requirements. To enhance consumer protection, the DoddFrank Act amended TILA to expand escrow requirements for first-lien 

higher-priced mortgage loans, including by generally establishing a 5-

year minimum for escrow accounts.59 CFPB’s rule on escrow for 

higher-priced mortgage loans increases the time for which mandatory 

escrow accounts established for such loans must be maintained from 

1 to 5 years, but provides an exemption for certain small creditors 

operating in rural or underserved areas and meeting other criteria.60

Representatives from ICBA and CUNA said that some of their 

community banks and credit union members had to increase 

resources to set up and monitor these escrow accounts. 

Representatives from both national associations stated that setting up 

and monitoring escrow accounts is burdensome and that some 

community banks and credit unions do not have adequate technology 

or staff to support it. CUNA representatives further stated that some 

credit unions had to outsource these functions. ICBA has advocated 

for community bank loans held in portfolio to be exempted from the 

escrow requirement for higher-priced mortgages because they do not 

hold a huge volume of such mortgages. CUNA representatives stated 

credit unions that provide low volumes of higher-priced mortgage 

 

58FDIC, Quarterly Banking Profile, First Quarter 2014 through Second Quarter 2015.

59The act generally requires that mandatory escrow accounts be established for closedend mortgages secured by a first lien on a customer’s primary residence if (1) the escrow 

account is required by federal or state law; (2) the mortgage is made, guaranteed, or 

insured by a state or federal agency; (3) the mortgage is a “higher-priced” mortgage loan; 

or (4) the escrow account is required pursuant to regulation. 15 U.S.C. § 1639d(b).

60Certain small creditors that operate in rural or underserved areas will generally be able 

to rely on the exception from the escrow requirement even if they continue to maintain 

escrow accounts established for first-lien higher-priced mortgage loans if the applications 

of such loans were received between April 1, 2010, and January 1, 2016, or if the escrow 

account was established as an accommodation to a distressed consumer. Amendments 

Relating to Small Creditors and Rural or Underserved Areas Under the Truth in Lending 

Act (Regulation Z), 80 Fed. Reg. 59,944, 59,954 (Oct. 2, 2015).

Rules Related to Higher-Priced 

Mortgage Loans and Mortgage 

Servicing
loans may cease to provide those loans altogether. While the survey 

results cannot be generalized to all banks, in a 2015 survey 

conducted by the American Bankers Association, the 182 responding 

banks in the survey indicated that cost and, a lack of escrow 

capabilities, or, inadequate staff were the primary reasons that they

did not offer escrow services.

Page 31 GAO-16-169 Dodd-Frank Regulations

61 As discussed earlier, the CFPB 

expanded the exemption for small creditors operating in rural or 

underserved areas.62

· Appraisal Requirements For Higher-Priced Mortgage Loans. CFPB’s 

joint rule with other federal financial regulators implementing the 

Dodd-Frank Act appraisal requirements for higher-priced mortgages

generally requires lenders to obtain one, or in some limited cases

where timing and pricing requirements are triggered, two written 

appraisals. In addition, the requirement to obtain two appraisals does 

not apply to a number of transactions, including where the property is 

 

61American Bankers Association, 22nd Annual American Bankers Association Real Estate 

Survey Report (Washington, D.C.: 2015). The survey was conducted between March and 

April of 2015 as a web survey sent out to both American Bankers Association member 

and non-member banks (commercial banks and thrifts). It was sent to over 3000 banks 

and 182 responded for a response rate of 6 percent overall. Sixty-eight percent of the 

respondents were commercial banks and 32 percent were thrifts. About 77 percent of the 

respondents had assets of less than $1 billion. Since the survey relies on a non-probability 

sample, the results cannot be used to make inferences about all commercial banks and 

thrifts.

62See 80 Fed. Reg. 59,944 (Oct. 2, 2015).
in a rural county.

Page 32 GAO-16-169 Dodd-Frank Regulations

63 One credit union representative said that having to 

deliver appraisals 3 business days prior to consummation delayed an 

intended closing (due to its remote location, which makes appraisals 

complex and turnaround times longer). Representatives from a state 

community bank association and one community bank we interviewed 

said the requirement for two appraisals (when timing and pricing 

requirements are triggered) is a challenge because they have had 

difficulty finding two independent appraisers who understand the 

market in their respective areas. ICBA representatives stated that for 

higher-priced mortgage loans of smaller amounts, the cost of 

appraisal becomes significant in proportion to the loan. 

Representatives from CUNA and two state credit union associations 

stated the rule had a minimal impact on their members because they 

generally did not make higher-priced loans.

· Mortgage Servicing Rules. CFPB issued two mortgage servicing rules 

under TILA and RESPA, designed in part to provide, among other 

things, better disclosure to consumers about their loan obligations and 

loss mitigation options that may be available if they have difficulty with 

their loan obligations.64 CFPB, in its final rule analysis, noted that the 

small servicer thresholds were appropriate in part because it 

 

63See 12 C.F.R. § 34.203(d) (OCC); 12 C.F.R. § 226.43(d)(7) (Federal Reserve); and 12 

C.F.R. § 1026.35(c)(3)(vii) (CFPB). Issued jointly by the CFPB, OCC, and Federal 

Reserve, the higher-priced mortgage loan appraisal rule implements section 1471 of the 

Dodd-Frank Act, which established additional appraisal requirements for “higher-risk 

mortgages,” defined as a mortgage that is not a qualified mortgage and the annual 

percentage rate of which generally exceeds average rates (specified in the act) for a 

comparable transaction. The OCC, Federal Reserve, and CFPB published the same rule 

separately; the FDIC, NCUA, and FHFA adopted the rule as published by the CFPB. 

Section 1472 of the act amends TILA to require that appraisers be independent and to 

prohibit any conflicts of interest. This report section focuses primarily on section 1471. For 

additional information relating to Dodd-Frank Act appraisal provisions, see GAO, 

Residential Appraisals: Opportunities to Enhance Oversight of an Evolving Industry, 

GAO-11-653 (Washington, D.C.: July 13, 2011); and Real Estate Appraisals: Appraisal 

Subcommittee Needs to Improve Monitoring Procedures, GAO-12-147 (Washington, D.C.: 

Jan. 18, 2012). The two-appraisal requirement is triggered when the property seller 

acquired the property for a lower price during the six months prior to the current sale and 

the price difference exceeds certain thresholds. See, e.g., 12 C.F.R. § 1026.35(c)(4) 

(CFPB). Several types of transactions are exempt from the entire rule, including smaller 

dollar loans of $25,000 or less, adjusted annually for inflation, and streamlined refinance 

transactions, among others. See, e.g., 12 C.F.R. § 1026.35(c)(2) (CFPB).

64A mortgage servicer is typically responsible for the day-to-day management of a 

mortgage loan account, such as processing loan payments and managing escrow 

accounts. The mortgage servicer may not be the same as the mortgage lender because 

the loans (and the right to service them) often are bought and sold. 
estimated that more than 98 percent of the insured depository 

institutions and credit unions, with less than $2 billion in assets fall 

beneath the 5,000 loan threshold, qualifying for the small servicer 

exemption from many of the rules.

Page 33 GAO-16-169 Dodd-Frank Regulations

65 Representatives from ICBA and 

one state credit union association told us that the exemptions 

available to small servicers are too narrow. Although the rules exempt 

small servicers from certain provisions, they require all servicers to 

respond to written notices of errors received from borrowers, and all 

servicers generally must not make the first notice or filing for 

foreclosure unless the borrower is more than 120 days delinquent, 

among other provisions. Representatives from several industry 

associations we interviewed said that community banks and credit 

unions had to expand resources to meet these requirements. ICBA 

representatives said the small servicer threshold should be increased 

from 5,000 to 20,000 loans. However, representatives from four 

community banks we interviewed stated the rules had no impact on 

their mortgage servicing or that they did not provide mortgage 

servicing. A 2013 survey by the Mercatus Center indicated that less 

than two-fifths of the approximately 200 small banks participating in 

their survey currently offered mortgage servicing and less than a tenth 

discontinued or anticipated discontinuing mortgage servicing as a 

result of the Dodd-Frank Act. While survey results and interview 

responses cannot be generalized to all small banks, they suggest that 

the regulatory requirements would have a small overall impact on 

mortgage servicing practices at these banks.66

 

65We plan to issue two reports in early 2016 on mortgage servicing: one on the trends of 

nonbank mortgage servicers, the benefits or risks associated with their participation in the 

market, and the oversight framework in which they operate; and another report on trends 

in the mortgage servicing industry, including the market and regulatory factors that 

influence small depository institutions and credit unions in holding or selling mortgage 

servicing rights and impacts to consumers related to these mortgage servicing decisions. 

66Hester Peirce, Ian Robinson, and Thomas Stratmann, How Are Small Banks Faring 

Under Dodd-Frank? (Arlington, VA.: Mercatus Center, George Mason University, February 

2014).The Mercatus Center survey was based on a convenience sample—a 

nonprobability sampling method made up of respondents who are easy to reach — of 

small banks and was conducted between July and September of 2013, prior to the 

effective dates of some of the rules covered in the survey. The survey was distributed by 

national and state-level banking associations to their members and to 500 additional small 

banks. The survey had about 200 respondents with less than $10 billion in assets, 

although the number of respondents differed for each section of the survey. A majority of 

the respondents fell in the asset-size range from $10 million to $1 billion. Because the 

survey relied on a non-probability, convenience sample, it is not possible to use the results 

to draw inferences about the population of small banks.
Representatives from community banks, credit unions, and industry 

associations we interviewed also identified the impact of several 

nonmortgage-related requirements and implementing rules on 

compliance and related business activities. These included requirements 

related to credit rating removal, remittance transfers, and debit 

interchange and routing (see table 4).

Page 34 GAO-16-169 Dodd-Frank Regulations

67

Table 4: Select Nonmortgage-Related Rules under the Dodd-Frank Act Effective by October 2015—Rule Descriptions, 

Available Exemptions, and Effective Dates

Agency and final rule Rule descriptions, applicable exemptions, and effective dates

Various Agencies, Permissible 

Investments for Federal and State Savings 

Associations: Corporate Debt Securities, 

77 Fed. Reg. 43,151 (July 24, 2012) 

(FDIC); Alternatives to the Use of External 

Credit Ratings in the Regulations of the 

OCC, 77 Fed. Reg. 35,253 (June 13, 

2012) (OCC); Alternatives to the Use of 

Credit Ratings, 77 Fed. Reg. 74,103 (Dec. 

13, 2012) (NCUA) (Removal of Credit 

Ratings from Regulations)

Section 939A of the Dodd-Frank Act required each applicable federal agency to review its 

regulations and identify (1) any regulation that required the use of an assessment of the 

creditworthiness of a security or money market instrument and (2) any references to or 

requirements in such regulations regarding credit ratings. Section 939A also directed 

each applicable federal agency to modify the regulations identified in the review by 

removing all references to or requirements of reliance on credit ratings and substituting 

alternative standards of creditworthiness. In establishing such alternative standards, 

agencies must seek to establish, to the extent feasible, uniform standards of 

creditworthiness, taking into account the entities it regulates and the purposes for which 

such entities would rely on the alternative standards. The effective dates of the rules and 

guidance varied by agency. Federal Deposit Insurance Corporation’s (FDIC) rule and final 

guidance became effective in July 2012; Board of Governors of the Federal Reserve 

System’s (Federal Reserve) guidance and Office of the Comptroller of the Currency’s

(OCC) rule became effective in January 2013; National Credit Union Administration’s

(NCUA) final rule became effective in June 2013.

Exemptions: None.

Consumer Financial Protection Bureau 

(CFPB), Electronic Fund Transfers 

(Regulation E), 79 Fed. Reg. 55,970 

(Sept. 18, 2014); Electronic Fund 

Transfers (Regulation E), 78 Fed. Reg. 

This CFPB rule amended Regulation E, which implements the Electronic Fund Transfer 

Act. It generally required remittance transfer providers to provide disclosures to 

consumers before they pay for the remittance transfers sent to designated recipients in 

foreign countries. The rule requires disclosure of various items such as the exchange rate 

and certain fees and taxes imposed by the remittance transfer providers. The rule also 

 

67Our September 2012 report identified several other nonmortgage Dodd-Frank Act 

provisions as potentially having an impact on community banks and credit unions. These 

included new requirements related to the registration of municipal advisors, the retention 

of credit risk in mortgages sold to the secondary market and swap transactions, and 

proprietary trading. Most community banks and credit unions we interviewed said that they 

were generally not engaged in the activities covered by the final rules issued under the 

Dodd-Frank Act provisions, and national and state industry associations said their 

members also generally were not affected by these rules. The regulators that promulgated 

the rules also stated they did not have a significant impact on community banks and credit 

unions. Our September 2012 report identified only one rule on small business loan data 

collection and reporting requirement as potentially having a direct impact on such lending. 

As of November 2015, that rule had not been proposed.

Industry Officials Also Said 

Certain NonmortgageRelated Rules Had Increased 

Compliance Burden or 

Changed Business Practices
Page 35 GAO-16-169 Dodd-Frank Regulations

Agency and final rule Rule descriptions, applicable exemptions, and effective dates

30,662 (May 22, 2013) (Remittance 

Transfers)

required providers to investigate and resolve errors a consumer reports with a transfer. 

Under the rule, the consumer generally has 30 minutes to cancel a transfer. For certain 

circumstances, the rule included a temporary exception that permitted insured institutions 

to estimate some information on the disclosure instead providing the exact pricing, 

including exchange rates and foreign fees and taxes. The Dodd-Frank Act provided that 

this exception was to end on July 21, 2015 but permitted CFPB to extend the exception 

for up to an additional five years. The CFPB exercised its authority to extend the 

exception until July 21, 2020. The rule became effective on October 28, 2013.

Exemptions: Companies that consistently provide 100 or fewer remittance transfers per 

year or that do not provide remittance transfers in the normal course of their business are 

exempt from the rule.

Federal Reserve, Debit Interchange Fees 

and Routing .76 Fed. Reg. 43,394 (July 

20, 2011)

The Federal Reserve adopted Regulation II (Debit Card Interchange Fees and Routing) to 

implement section 1075 of the Dodd-Frank Act. Regulation II established standards for 

assessing whether debit card interchange fees received by issuers are reasonable and 

proportional to the costs incurred by issuers for electronic debit transactions. The rule sets

a cap on the maximum permissible interchange fee that any issuer may receive for an 

electronic debit transaction at $0.21 per transaction, plus 5 basis points multiplied by the 

transaction’s value.aThe rule also prohibits all issuers and networks from restricting the 

number of networks over which debit transactions may be processed to less than two 

unaffiliated networks. The rule became effective October 1, 2011.

Exemptions: Issuers, together with their affiliates, that have less than $10 billion in 

assets are exempt from the fee cap but not from the network requirement.

Source: GAO analysis of CFPB, Federal Reserve, NCUA, OCC, and FDIC documents. | GAO-16-169

a

The cap is 21 cents plus 0.05 percent multiplied by the value of the transaction, plus up to 1 cent for 

the certified fraud-prevention programs.

The Dodd-Frank Act required each federal agency to review regulations

that require the use of an assessment of creditworthiness of a security or 

money market instrument and any references to, or requirements in, 

those regulations regarding credit ratings. The act also required the 

agencies to modify the regulations identified during the review by 

substituting any references to, or requirements of, reliance on credit 

ratings with standards of creditworthiness each agency determines to be 

appropriate. Under the agencies’ revised regulations, to determine 

whether a security is “investment grade,” insured depository institutions 

must determine that the probability of default by the issuer is low and the 

full and timely repayment of principal and interest is expected.68 To 

 

68The Federal Reserve did not issue a final rule. However, OCC’s rule had broad 

applicability because the Federal Reserve Board’s Regulation H and FDIC’s regulations 

on activities of insured state banks and insured savings associations prohibit member and 

nonmember state banks and state savings associations from engaging in activities and 

investments that are not permissible for national banks and their subsidiaries. Therefore, 

OCC’s final rule established the standard for all banks and thrifts.

Removal of Credit Ratings 

from Regulations
comply with the new standard, banks and credit unions may not rely 

exclusively on external credit ratings, but may continue to use such 

ratings as part of their determinations. They must supplement any 

consideration of external ratings with due diligence processes and 

additional analyses that are appropriate for the institution’s risk profile and 

the size and complexity of the investment instrument.

Page 36 GAO-16-169 Dodd-Frank Regulations

69

Representatives from two industry associations, three community banks, 

and one credit union said that the rules increased compliance burden. 

Representatives from the community banks and credit union said that 

investing became more complex and they have had to devote more time 

and resources to research the investment vehicles. Two community bank 

association representatives we interviewed stated that community banks 

do not have the internal expertise to evaluate their investments. One 

community bank association’s representative also stated that the rule 

required community banks to hire experts and spend additional time to 

document the due diligence they have conducted. While the results 

cannot be generalized to all banks, in the Mercatus Center survey, almost 

half of the approximately 200 community banks responding to the survey 

said that they altered their credit analysis practices in response to this 

provision or related guidance, while the other half said they did not. 

Among those that altered practices, some said they contracted with 

outside firms or hired additional employees to conduct credit analysis or 

altered the type of securities they purchased.70

The Dodd-Frank Act imposes new requirements on remittance transfer 

providers. CFPB’s rule on remittance transfers amended Regulation E, 

which implements the Electronic Fund Transfer Act. It requires companies 

to provide disclosures to consumers before they pay for the remittance 

transfers, including about items such as the applicable exchange rate, if 

any, and certain fees and taxes. In our September 2012 report, 

representatives from some community banks, credit unions, and 

associations we interviewed expected the remittance transfer rule to 

 

69At the same time OCC issued its final rule to revise the “investment grade” standard, the 

agency published guidance to further explain how banks should implement the new 

standard and continue to adhere to the relevant due diligence requirements. See 

Guidance on Due Diligence Requirements in Determining Whether Securities Are Eligible 

for Investment, 77 Fed. Reg. 35,259 (June 13, 2012).

70Hester Peirce, Ian Robinson, and Thomas Stratmann, How Are Small Banks Faring 

Under Dodd-Frank, February 2014.

Remittance Transfers
decrease their (or their member institutions) remittance transfer 

business.

Page 37 GAO-16-169 Dodd-Frank Regulations

71

Representatives from four industry associations, as well as two credit 

unions and one community bank whom we interviewed stated the rule 

has had a negative impact. ICBA representatives said that some 

community banks tried to keep the number of remittance transfers each 

year to below 100 (to avoid having the rules apply to them). 

Representatives from CUNA and two state credit union associations said 

that some credit unions have increased fees or left the market. For 

example, one credit union representative said that it did not have access 

to the information and services required by the rule and had to contract 

with a correspondent bank to continue to offer the service. As a result, it 

increased its remittance fees. One state credit union association 

representative said that their members stopped the service to avoid the 

related compliance costs. Although the Mercatus Center conducted its 

survey of approximately 200 banks prior to the effective date of the rule, it 

indicated that a small percentage of the respondents had discontinued or 

anticipated discontinuing offering remittances as a result of the rule.72

CFPB stated that in response to these concerns, it delayed and amended 

this rule twice to ease compliance concerns related to the disclosure of 

foreign fees and taxes.73 In addition, CFPB officials stated that, based on 

their analysis of NCUA call report data, about 90 percent of the credit 

unions do not send over 100 transfers annually and thus are exempt from 

the remittance rule. CFPB officials additionally stated that the call data 

indicates virtually no change in the remittance market by credit unions 

since the rule has been implemented.

 

71See GAO-12-881.

72Hester Peirce, Ian Robinson, and Thomas Stratmann, How Are Small Banks Faring 

Under Dodd-Frank? (Arlington, VA.: Mercatus Center, George Mason University, February 

2014).

73First, in a final rule published May 22, 2013, CFPB made optional, in certain 

circumstances, the requirement to disclose fees imposed by a designated recipient’s 

institution and also made optional the requirement to disclose taxes collected by a person 

other than the remittance transfer provider. See Electronic Fund Transfers (Regulation E), 

78 Fed. Reg. 30,662, 30,670-77 (May 22, 2013). Second, in a final rule published 

September 18, 2014, CFPB extended the exception that permits insured institutions to 

estimate certain information, including exchange rates and foreign fees and taxes in 

certain circumstances from July 2015 to July 2020, having found that the conditions set 

forth in the Dodd-Frank Act warranting such an extension were met. See Electronic Fund 

Transfers (Regulation E), 79 Fed. Reg. 55,970 (Sept. 18, 2014).
The Dodd-Frank Act requires the Federal Reserve to prescribe 

regulations for any interchange transaction fee that an issuer may receive 

or charge for an electronic debit transaction. In implementing the debit 

interchange fee rule, the Federal Reserve set a cap on the maximum 

permissible interchange fee that any issuer may receive for such a 

transaction. Although issuers, together with their affiliates, that have less 

than $10 billion in assets are exempt from the cap on interchange fees, all 

issuers and networks are prohibited from restricting the number of 

networks over which the debit transaction may be processed to less than 

two unaffiliated networks. Our September 2012 report on community 

banks found that the rule had had a limited impact on exempt issuers, but 

industry officials expressed concerns about the potential for their 

interchange fees or fee income to decline over the long term.

Page 38 GAO-16-169 Dodd-Frank Regulations

74

Representatives from five industry associations, one community bank, 

and one credit union stated that the rule has led to a decline in 

interchange revenue, although one credit union said that the decline was 

minimal. Representatives from one credit union stated that it was hard to 

measure the impact of the rule because their revenue had increased due 

to the increase in volume of debit card transactions. Data collected by the 

Federal Reserve from card networks on the interchange fees showed that 

exempt issuers have not experienced a significant impact on the amount 

of average interchange fees.75 In 2011, these data showed that the 

average interchange fee received by exempt issuers declined from $0.45 

over the first three quarters of 2011 to $0.43 in the fourth quarter of 2011, 

when the rule took effect. Federal Reserve data from 2014 showed that 

the average interchange fee remained at $0.43 for exempt issuers.

Regulators told us that it is still too early to assess the full impact of DoddFrank Act rulemakings on community banks and credit unions, and while 

they have heard concerns about the increase in compliance burden, they 

have not been able to quantify compliance costs. Two regulators told us 

that it was too early to determine the impact of the Dodd-Frank Act 

rulemakings; NCUA officials stated that there has been little cumulative 

impact from the rules to date because many have only recently become 

 

74See GAO-12-881.

75Federal Reserve, Average Debit Card Interchange Fee By Payment Card Network, 

(Washington, D.C.: May 12, 2015). 

Debit Interchange Fee Rule

Regulators Face 

Challenges Determining 

the Cumulative Impact of 

Dodd-Frank Act Rules on 

Community Banks and 

Credit Unions 
effective. OCC and FDIC officials also said that it would be difficult to 

disentangle the impact of Dodd-Frank Act regulations from changes in 

response to the overall economic environment or other rulemakings.

FDIC, OCC, and Federal Reserve officials stated that the institutions with 

which they have spoken are concerned about integrating many rules into 

their business operations and with the increase in compliance costs. For 

instance, OCC officials stated that even if community banks do not hire 

new staff, the existing staff would have to be redeployed into compliance 

areas. FDIC officials stated that the cumulative compliance cost is hard to 

quantify because these costs are not reported separately in Call Reports. 

Regulators also said that compliance activities do not appear to have 

reduced profitability for community banks. For example, Federal Reserve 

officials said that profitability for community banks has increased. 

Additionally, FDIC officials said that noninterest expenses have 

decreased or remained flat since the financial crisis. Further, FDIC 

officials stated that the Dodd-Frank Act did not appear to have conferred 

a negative effect. For example, they noted that since 2010, small banks 

have increased loan growth and their earnings have improved. Officials 

from OCC said that the benefits of the Dodd-Frank Act would be difficult 

to quantify, but OCC and CFTC officials stated that having a safer and 

sounder financial system is a benefit of the Dodd-Frank Act. In our prior 

work on federal rulemaking, many agency officials told us that monetizing 

benefits is more difficult than monetizing costs.

Page 39 GAO-16-169 Dodd-Frank Regulations

76

OCC, FDIC, and the Federal Reserve have been conducting 

retrospective reviews of their rules pursuant to EGRPRA, while NCUA 

and CFPB have been conducting retrospective reviews pursuant to other 

requirements and internal policies. These reviews include Dodd-Frank Act 

rules. As part of their review, agencies have requested comments from 

the public on the impact on the community banks and conducted outreach 

 

76GAO, Federal Rulemaking: Agencies Included Key Elements of Cost-Benefit Analysis, 

but Explanations of Regulations’ Significance Could Be More Transparent, GAO-14-714 

(Washington, D.C.: Sept. 11, 2014). We noted in prior work that the Dodd-Frank Act’s 

potential benefit of reducing the probability or severity of a future financial crisis cannot be 

readily observed and this potential benefit is difficult to quantify. Any analyses must be 

based on assumptions about, or models of, the economy. Consequently, the results of 

such analyses are subject to substantial uncertainty. GAO, Financial Regulatory Reform: 

Financial Crisis Losses and Potential Impact of the Dodd-Frank Act, GAO-13-180 

(Washington, D.C.: Jan. 16, 2013).
meetings, including an outreach meeting with those in rural areas. In past 

work, we have noted the usefulness of retrospective reviews.

Page 40 GAO-16-169 Dodd-Frank Regulations

77

CFPB, which is not subject to EGRPRA, conducts its own analyses of 

regulations that impact financial institutions with $10 billion or less in 

assets. Section 1022(d) of the Dodd-Frank Act requires CFPB to assess 

each significant rule it adopts under federal consumer financial law and 

publish a report of the assessment not later than 5 years after the 

effective date of such rule.78 The assessment must address, among other 

relevant factors, the rule’s effectiveness in meeting the purposes and 

objectives of Title X of the Dodd-Frank Act, and the specific goals stated 

by the CFPB. According to CFPB officials, the review conducted for each 

significant rule is to include broad data analysis. In our June 2015 report

on mortgage reforms, we found that CFPB has begun planning for review 

of the qualified mortgage regulations.79 Regulators also said they are 

aware of industry concerns about the potential for unintended impacts 

from Dodd-Frank Act rulemaking and implementations. Representatives 

from community banks, credit unions, and industry associations 

expressed concern about future “trickledown effects” from regulations 

intended for large banking institutions and one-size-fits-all regulation on 

community banks and credit unions. For example, representatives from 

community banks and credit unions we interviewed stated that while 

CFPB exempts them from certain rules or parts of the rules, their 

prudential regulators might hold them to regulatory standards for larger 

 

77See GAO-12-151 and GAO, Reexamining Regulations: Agencies Often Made 

Regulatory Changes, but Could Strengthen Linkages to Performance Goals, GAO-14-268 

(Washington, D.C.: Apr. 11, 2014). We reported that retrospective analysis can help

agencies evaluate how existing regulations work in practice. Agencies could use 

retrospective analysis to examine how existing regulations have contributed to specific 

policy goals, assess the effectiveness of their implementation, or reexamine their 

estimated benefits and costs based on actual performance and experience.

78Pub. L. No. 111-203, § 1022(d), 124 Stat. 1376, 1984-85 (2010) (codified at 12 U.S.C. § 

5512(d)). 

79GAO-15-185. CFPB identified potential outcomes, data sources, and analytical methods 

for examining its qualified mortgage regulations, but had not finalized its plans that 

specified what outcomes and methodologies it will use to examine the effects of the CFPB 

regulations as of May 2015.We recommended that CFPB complete its plan on its 

retrospective review of qualified mortgage regulations and in its plan, identify the 

outcomes it will examine to measure the effects of the regulations and specific metrics, 

baselines, and analytical methods to be used. Additionally, we recommended CFPB 

include in its plan alternate metrics, baselines, and analytical methods that could be used 

if data were to remain unavailable.
institutions as a best practice. Additionally, some industry associations 

have expressed concerns about a one-size-fits-all approach in regulating 

community banks and credit unions as well as large banking institutions. 

FDIC and Federal Reserve officials stated that they have heard similar 

concerns from the institutions they regulate. FDIC officials stated that the 

agency has emphasized that best practices are not requirements and that 

FDIC has been monitoring its examiners to help ensure they are following 

FDIC policies, which take into consideration the size, complexity, and risk 

profiles of banks. Federal Reserve officials said that the Federal Reserve 

has set expectations for its examiners to not examine regional banks 

using the same requirements as for large banking institutions. 

Additionally, Federal Reserve officials said the agency has tried to 

communicate the applicability of rules clearly to smaller institutions.

We developed indicators that, although imperfect, may shed light on the 

cumulative impact of Dodd-Frank Act regulations on small banks and 

credit unions over time. These indicators are likely to capture some of the 

cost associated with regulatory compliance and include: (1) the number of 

employees; (2) a measure of labor and other noncapital costs; (3) 

profitability; and (4) residential mortgage lending. As we have discussed, 

both mortgage-related rules and certain nonmortgage-related rules may 

increase the compliance burden for small banks and credit unions. Banks 

and credit unions may have to hire additional staff to manage compliance 

with regulations, hire outside counsel or consultants, or take other 

actions. As a result, the numbers of employees and the total cost of 

resources other than funding at banks and credit unions are likely to 

increase and profits are likely to decrease, all else being equal. Also, as 

discussed earlier, mortgage-related rules may affect mortgage lending by 

small banks and credit unions. Residential mortgage-related regulations, 

in particular, may raise the cost of originating loans and result in a shifting 

of portfolios away from residential lending. All else being equal, 

residential mortgage lending by small banks and credit unions is likely to 

decrease as a result.

While these indicators are baselines against which to compare future 

trends between different sized institutions, they are limited in their ability 

to assess the regulatory burden associated with the Dodd-Frank Act and 

care should be used in interpreting the results of this analysis. First, the 

level of, and trends in, these indicators for the various groups of 

institutions does not provide evidence on the impact of Dodd-Frank at this 

time. Going forward, the differences in the trends for each quintile would 

be the more important indicator to monitor. Second, even when assessed 

Page 41 GAO-16-169 Dodd-Frank Regulations

Indicators Provide 

Baselines for Monitoring 

the Future Impact of the 

Dodd-Frank Act on Small 

Banks and Credit Unions
over time and across different size institutions, our analysis cannot rule 

out other important factors that may influence our indicators, including 

other regulations, policies, and general macroeconomic conditions, such 

as the demand for credit. Furthermore, trends in our indicators are 

generally representative of trends for banks and credit unions of different 

sizes, but may not reflect the experience of every bank or credit union. 

Moreover, many of the Dodd-Frank Act regulations that apply to small 

banks and credit unions have not been implemented or have been 

implemented only recently. Finally, while we presented similar indicators 

for banks and credit unions, comparisons between the two types of 

institutions on the basis of these measures may not be appropriate and 

certain indicators may be more relevant than others for each type of 

institution.

Figure 1 summarizes trends in our indicators for banks of different sizes. 

We used total assets to measure size and grouped banks into five equalsized groups, or quintiles, based on total assets. The first quintile 

represents the smallest banks while the fifth quintile represents the 

largest. We then calculated the median value of each indicator for each 

quintile for each quarter. Our indicators for banks allow for the following 

observations:

· Smaller banks tend to have more employees per $1 million in assets 

than larger banks, and employment at banks of all sizes generally has 

fallen since the third quarter of 2010.

· Smaller banks tend to have slightly higher noninterest expenses (e.g.,

salaries and employee benefits, consulting and advisory expenses) as 

a percentage of assets than larger banks, and noninterest expenses 

generally have fallen for banks of all sizes since the third quarter of 

2010.

· Smaller banks tend to have lower earnings as a percentage of assets 

than larger banks, at least in recent quarters, and earnings generally 

have increased for banks of all sizes since the third quarter of 2010.

· The smallest banks tend to have fewer residential mortgage loans on 

their balance sheets as a percentage of assets than larger banks. 

However, since the third quarter of 2010, residential mortgage loans 

have grown as a fraction of assets for banks of all sizes.

Page 42 GAO-16-169 Dodd-Frank Regulations
Figure 1: Indicators of the Potential Impact of the Dodd-Frank Act on Banks by Size, First Quarter 2006 through Second 

Page 43 GAO-16-169 Dodd-Frank Regulations

Quarter 2015

Notes: Levels and trends in these indicators should not be interpreted as causally related to the 

Dodd-Frank Act. Over time, changes in the differences across quintiles will provide information that 

may be suggestive of Dodd-Frank Act’s impact. We used data on insured depository institutions 

(banks) that filed Reports of Condition of Income (Call Reports) from first quarter 2006 to second 

quarter 2015. We measured employment as the number of full-time equivalent employees per $1 

million in assets. We measured labor and other noncapital costs as noninterest expense as a 

percentage of total assets. We measured profitability as net income before income taxes, 

extraordinary income, and other adjustments as a percentage of total assets. We measured 

residential mortgage lending as residential mortgage loans as a percentage of total assets. We 

grouped banks into size quintiles based on the distribution of total assets in each quarter. We 

calculated our indicators for each bank and then calculated the median value of the indicator for each 

quintile.

Figure 2 summarizes trends in our indicators for credit unions of different 

sizes. As we did with banks, we used total assets to measure size and 

grouped credit unions into quintiles based on total assets and then 

calculated the median value of each indicator for each quintile for each 

quarter. Again, the current level of these indicators and the trends for 

each quintile are not sufficient for assessing the impact of the Dodd-Frank
Act. Nevertheless, our indicators for credit unions allow for the following 

observations:

· Smaller credit unions tend to have more full-time employees per $1 

million than larger credit unions with the exception of the smallest, 

which tend to have no full-time employees at all. Furthermore, smaller 

credit unions tend to have more part-time employees per $1 million in 

assets than larger credit unions. However, the numbers of both fulltime and part-time employees generally have decreased since the 

third quarter of 2010.

· Noninterest expenses as a percentage of assets are generally the 

same for credit unions of different sizes and generally have decreased 

for credit unions of all sizes since the third quarter of 2010.

· Smaller credit unions tend to have lower earnings as a percentage of 

assets than larger credit unions, but earnings at credit unions of all 

sizes generally have increased since the third quarter of 2010.

Page 44 GAO-16-169 Dodd-Frank Regulations

80

· Smaller credit unions tend to have fewer residential mortgage loans 

on their balance sheets as a percentage of assets than larger credit 

unions, and most of the smallest credit unions have no residential 

mortgages at all. However, residential mortgages generally have 

decreased as a percentage of assets for larger credit unions —those 

in the third, fourth, and fifth quintiles—but have increased for the 

smaller credit unions in the second quintile.

 

80Earnings for credit unions of all sizes generally declined during the 2007-2009 financial 

crisis. In 2008, 18 credit unions failed and $290 million in losses were charged to the 

National Credit Union Share Insurance Fund. In 2009, 28 credit unions failed and National 

Credit Union Share Insurance Fund absorbed another $695 million in insurance fund 

losses.
Figure 2: Indicators of the Potential Impact of the Dodd-Frank Act on Credit Unions by Size, First Quarter 2006 through 

Page 45 GAO-16-169 Dodd-Frank Regulations

Second Quarter 2015

Notes: Levels and trends in these indicators should not be interpreted as being causally related to the

Dodd-Frank Act. Over time, changes in the differences across quintiles will provide information that 

may be suggestive of Dodd-Frank Act’s impact. We used data on credit unions that filed Reports of 

Condition and Income (Call Reports) from first quarter 2006 to second quarter 2015. We measured 

employment as the number of full-time employees per $1 million in assets and the number of parttime employees per $1 million in assets. We measured labor and other noncapital costs as 

noninterest expense as a percentage of total assets. We measured profitability as net income as a 

percentage of total assets. We measured residential mortgage lending as residential mortgage loans 

as a percentage of total assets. We grouped credit unions into size quintiles based on the distribution 

of total assets in each quarter. We calculated our indicators for each credit union and then calculated 

the median value of the indicator for each quintile.
Financial regulators have continued to implement reforms pursuant to the 

Dodd-Frank Act, but the full impact of the act remains uncertain. This 

uncertainty stems from a number of factors, in particular, not all rules 

have been finalized and taken effect. When the act’s reforms are fully 

implemented, it will take time for the financial services industry to comply 

with the array of new regulations—meaning additional time will need to 

elapse to measure the impact of the rules. Moreover, the evolving nature 

of implementation makes isolating the Dodd-Frank Act’s effect on the 

U.S. financial marketplace difficult. This task is confounded by the many 

factors that can affect the financial marketplace, including factors that 

could have an even greater impact than the act.

Recognizing these limitations and difficulties, we developed a 

multipronged approach to analyze current data and trends that might 

indicate some of the Dodd-Frank Act’s initial impacts. First, using data 

through the second quarter of 2015, we updated the indicators developed 

in our December 2012 report to monitor changes in certain characteristics 

of SIFIs, which are subject to enhanced prudential standards and 

oversight under the act, and also developed new indicators.

Page 46 GAO-16-169 Dodd-Frank Regulations

81 Second, we 

updated our difference-in-difference econometric analysis to infer the 

act’s impact on funding costs for bank SIFIs and the safety and 

soundness of bank SIFIs. Third, we developed indicators of designated 

nonbanks that parallel our bank SIFI indicators. Fourth, using data 

through the second quarter of 2014, we updated indicators developed in 

our December 2013 report to monitor the extent to which certain of the 

act’s swap reforms are consistent with the act’s goals of reducing risk.82

All of these analyses have limitations, which we discuss below.

 

81See GAO-13-101.

82See GAO-14-67.

Possible Impacts of 

the Dodd-Frank Act 

on Bank SIFIs, 

Designated 

Nonbanks, and 

Swaps
According to its legislative history, the Dodd-Frank Act contains 

provisions intended to reduce the risk of failure of a large, complex 

financial institution and the damage that such a failure could do to the 

economy.

Page 47 GAO-16-169 Dodd-Frank Regulations

83 Such provisions include (1) authorizing FSOC to designate a 

nonbank financial company for Federal Reserve supervision if FSOC 

determines it could pose a threat to U.S. financial stability and (2) 

directing the Federal Reserve to impose enhanced prudential standards 

and oversight on bank holding companies with $50 billion or more in total 

consolidated assets (bank SIFIs) and nonbank financial companies 

designated by FSOC (designated nonbanks). (See app. IV for a summary 

of provisions related to SIFIs and their rulemaking status.)

As we first reported in December 2012, the Dodd-Frank Act and its 

implementing rules may result in adjustments to the size, 

interconnectedness, complexity, leverage, or liquidity of bank SIFIs over 

time.84 We updated the indicators we developed in our December 2012 

report and updated in our December 2013 and December 2014 reports to 

monitor changes in some of these characteristics of SIFIs.85 In addition, 

we added indicators of interconnectedness. The size, 

interconnectedness, and complexity indicators reflect the potential for the 

financial distress of a single SIFI to affect the financial system and 

economy (spillover effects). The leverage and liquidity indicators reflect a 

SIFI’s resilience to shocks or its vulnerability to financial distress.

 

83S. Rep. No. 111-176, at 4 (2010). 

84See GAO-13-101.

85Our indicators analysis generally includes all top-tier U.S. bank holding companies with 

total consolidated assets of $1 billion or more that filed Form FR Y-9C for one or more 

quarters during the period from the first quarter of 2006 to the second quarter of 2015, 

including any U.S.-based bank holding company subsidiaries of foreign banking 

organizations that on their own have total consolidated assets of $1 billion or more and 

that filed Form FR Y-9C. Generally, a foreign banking organization is a company 

organized under the laws of a foreign country that engages in the business of banking and 

that operates a U.S. branch, agency, or commercial lending company subsidiary in the 

United States or controls a bank in the United States, and any company of which the 

foreign bank is a subsidiary. We chose the threshold of $1 billion in assets to match the 

threshold for reporting Form FR Y-9C starting in the first quarter of 2015. We defined bank 

SIFIs as bank holding companies with total assets of $50 billion or more. We defined large 

bank SIFIs as bank holding companies with total assets of $500 billion or more and we 

defined other bank SIFIs as bank holding companies with total assets of at least $50 

billion but less than $500 billion. We defined non-SIFI bank holding companies as bank 

holding companies with less than $50 billion in total assets. 

Indicators Suggest Large 

Bank SIFIs Have Become 

Larger but Less 

Vulnerable to Financial 

Distress Since the DoddFrank Act
It is important to note however, that our analysis has limitations. For 

example, the indicators do not identify causal links between changes in 

SIFI characteristics and the act. Rather, the indicators track changes in 

the size, interconnectedness, complexity, leverage, and liquidity of SIFIs 

since the passage of the act to examine if the changes have been 

consistent with the goals of the act. However, other factors—including 

international banking standards agreed upon by the Basel Committee on 

Banking Supervision (Basel Committee) and monetary policy actions—

also affect bank holding companies and, thus, the indicators.

Page 48 GAO-16-169 Dodd-Frank Regulations

86 These 

factors may have a greater effect than the Dodd-Frank Act on SIFIs. 

Furthermore, because a number of rules implementing provisions related 

to SIFIs have not yet been finalized, our indicators include the effects of 

these rules only insofar as SIFIs have changed their behavior in response 

to issued rules or in anticipation of expected rules. In this regard, our 

indicators provide baselines against which to compare future trends. See 

appendix VI for additional limitations of our indicators.

Table 5 summarizes the changes in our bank SIFI indicators from the 

third quarter of 2010 through the second quarter of 2015 and allows for 

the following observations (see app. VI for more information):

· Changes in some size, interconnectedness, and complexity indicators 

are consistent with increased potential spillover effects for large bank 

SIFIs (which we define as bank holding companies with $500 billion or 

more in assets) while changes in others are consistent with decreased 

potential spillover effects for large bank SIFIs.

· Changes in all of the size, interconnectedness, and complexity 

indicators are consistent with decreased or no change in potential 

spillover effects for other bank SIFIs (which we define as bank holding 

companies with at least $50 billion but less than $500 billion in 

assets).

· Changes in all of our leverage and liquidity indicators are consistent 

with increased resilience for both large bank SIFIs and for other bank 

SIFIs.

 

86The Basel Committee has agreed on a new set of risk-based capital, leverage, liquidity, 

and other requirements for banking institutions (Basel III requirements). Additionally, the 

Financial Stability Board and the Basel Committee have agreed on new capital and other 

requirements applicable to designated globally systemically important banks. U.S. banking 

regulators have implemented some of these requirements. 
Table 5: Summary of Changes in Indicators for Bank Systemically Important Financial Institutions (Bank SIFIs), from 2010 

Page 49 GAO-16-169 Dodd-Frank Regulations

through 2015

Characteristic

Indicator (italicized) and description of 

change

What does the change in the indicator 

suggest about potential spillover effects 

or resilience?

Size. Size captures the amount of 

financial services or financial 

intermediation that an institution 

provides and is associated with the 

potential for its financial distress to 

affect the financial system and the 

broader economy (spillover effects).

Numbers of SIFIs. Between the third quarter 

of 2010 and the second quarter of 2015, the 

numbers of large bank SIFIs and the 

numbers of other bank SIFIs decreased.

Decreased potential spillover effects for large 

bank SIFIs and for other bank SIFIs.

Total assets. Between the third quarter of 

2010 and the second quarter of 2015, 

median assets for large bank SIFIs increased 

while median assets of other bank SIFIs 

decreased.

Increased potential spillover effects for large 

bank SIFIs and decreased potential spillover 

effects for other bank SIFIs.

Market share. Between the third quarter of 

2010 and the second quarter of 2015, 

median market shares for large bank SIFIs 

increased while median market shares of 

other bank SIFIs remained about the same.

Increased potential spillover effects for large 

bank SIFIs and with no change in potential 

spillover effects for other bank SIFIs.

Interconnectedness. 

Interconnectedness captures direct or 

indirect linkages between financial 

institutions that may transmit distress 

from one institution to another (spillover 

effects).

Gross notional amounts of credit default 

swaps outstanding for which the company is 

the reference entity. Between the third 

quarter of 2010 and the first quarter of 2015, 

median credit default swaps for large bank 

SIFIs and for other bank SIFIs decreased. 

Decreased potential spillover effects for large 

bank SIFIs and for other bank SIFIs.

Total debt outstanding (excluding deposits). 

Between the third quarter of 2010 and the 

second quarter of 2015, median debt for 

large bank SIFIs and for other bank SIFIs 

decreased.

Decreased potential spillover effects for large 

bank SIFIs and for other bank SIFIs.

Complexity. Institutions that are more 

complex are likely to be more difficult to 

resolve and therefore cause significantly 

greater disruption to the wider financial 

system and economic activity if they fail 

(spillover effects).

Numbers of legal entities. Between the 

second quarter of 2010 and the second 

quarter of 2015, median numbers of legal 

entities for large bank SIFIs and for other 

bank SIFIs decreased.

Decreased potential spillover effects for large 

bank SIFIs and for other bank SIFIs.

Numbers of foreign legal entities. Between 

the second quarter of 2010 and the second 

quarter of 2015, median numbers of foreign 

legal entities for large bank SIFIs increased 

while median numbers of foreign legal 

entities for other bank SIFIs decreased.

Increased potential for spillover effects for 

large bank SIFIs and decreased potential 

spillover effects for other bank SIFIs.

Numbers of countries in which foreign legal 

entities are located. Between the second 

quarter of 2010 and the second quarter of 

2015, median numbers of countries in which 

foreign legal entities are located for large 

bank SIFIs remained relatively constant, 

while median numbers of countries in which 

foreign legal entities are located for other 

bank SIFIs decreased.

No change in the potential for spillover 

effects for large bank SIFIs and decreased 

potential for spillover effects for other bank 

SIFIs.
Page 50 GAO-16-169 Dodd-Frank Regulations

Characteristic

Indicator (italicized) and description of 

change

What does the change in the indicator 

suggest about potential spillover effects 

or resilience?

Leverage. Leverage generally captures 

the relationship between an institution’s 

exposure to risk and capital that can be 

used to absorb losses from that 

exposure and is associated with the 

likelihood that an institution will fail 

(resilience). 

Tangible common equity as a percentage of 

assets. Between the third quarter of 2010 

and the second quarter of 2015, median 

tangible common equity as a percentage of 

assets for large bank SIFIs and for other 

bank SIFIs increased.

Increased resilience for large bank SIFIs and 

for other bank SIFIs.

Total equity as a percentage of assets. 

Between the third quarter of 2010 and the 

second quarter of 2015, median total equity 

as a percentage of assets for large bank 

SIFIs and for other bank SIFIs increased.

Increased resilience for large bank SIFIs and 

for other bank SIFIs.

Liquidity. Liquidity captures an 

institution’s ability to fund assets and 

meet obligations as they come due and 

is associated with the likelihood that an 

institution will fail (resilience).

Short-term liabilities as a percentage of total 

liabilities. Between the third quarter of 2010 

and the second quarter of 2015, median 

short-term liabilities as a percentage of total 

liabilities for large bank SIFIs and for other 

bank SIFIs decreased.

Increased resilience for large bank SIFIs and 

for other bank SIFIs.

Liquid assets as a percentage of short-term 

liabilities. Between the third quarter of 2010 

and the second quarter of 2015, median 

liquid assets as a percentage of short-term 

liabilities for large bank SIFIs and for other 

bank SIFIs increased.

Increased resilience for large bank SIFIs and 

for other bank SIFIs.

Source: GAO analysis of data from the Federal Reserve Bank of Chicago, the Bureau of Economic Analysis, the Federal Reserve Board, and Bloomberg | GAO-16-169.

Notes: The changes in indicators are suggestive, meaning they are consistent with changes in 

resilience and the potential for spillover effects but cannot definitively establish the impact of the 

Dodd-Frank Act. Our indicators analysis generally includes all top-tier U.S. bank holding companies 

with total consolidated assets of $1 billion or more that filed Form FR Y-9C for one or more quarters 

during the period from the first quarter of 2006 to the second quarter of 2015, including any U.S.-

based bank holding company subsidiaries of foreign banking organizations that on their own have 

total consolidated assets of $1 billion or more and that filed Form FR Y-9C. We chose the threshold of 

$1 billion in assets to match the threshold for reporting Form FR Y-9C starting in the first quarter of 

2015. We defined bank SIFIs as bank holding companies with total assets of $50 billion or more, 

large bank SIFIs as bank holding companies with total assets of $500 billion or more, other bank 

SIFIs as bank holding companies with total assets of at least $50 billion but less than $500 billion, 

and non-SIFI bank holding companies as bank holding companies with less than $50 billion in total 

assets. We calculated each of our indicators for each bank holding company in our sample for each 

quarter from the first quarter of 2006 to the second quarter of 2015, with the exceptions of our 

complexity indicators, which we calculated only for bank SIFIs as of the second quarter of each year 

from 2006 to 2015, and one of our interconnectedness indicators, which we calculated only for bank 

SIFIs. We then calculated the median value of each indicator for each group of bank holding 

companies—large bank SIFIs, other bank SIFIs, all bank SIFIs, non-SIFI bank holding companies, 

and all bank holding companies, to the extent possible—and track the median values over time. 

Finally, we assess the changes in the median values of the indicators for large bank SIFIs and other 

bank SIFIs between the second or third quarter of 2010 and the second quarter of 2015, depending 

on the indicator. We say that an indicator has increased or decreased if it has changed by 5 percent 

or more, depending on the direction of the change, and we say that an indicator has remained about 

the same if it has changed by less than 5 percent.
The act requires the Federal Reserve to impose a variety of regulatory 

reforms on SIFIs, including enhanced risk-based capital, leverage, and 

liquidity requirements. These reforms may affect the safety and 

soundness of bank SIFIs and the funding costs for bank SIFIs. 

Specifically, capital and leverage requirements may help reduce the 

probability of bank failures and promote financial stability. However, by 

increasing funding costs for banks, the requirements might also cause 

banks to raise lending rates and limit their ability to provide credit, 

especially during a crisis.

Page 51 GAO-16-169 Dodd-Frank Regulations

87 Similarly, while stricter liquidity requirements 

may help reduce the probability of bank failures and promote financial 

stability, banks could respond to these requirements by increasing 

lending spreads to offset lower yields on assets or higher costs 

associated with liabilities with longer maturities. To the extent that they 

increase the cost and reduce the availability of credit, these reforms may 

lead to reduced output and economic growth.88

Our analysis shows an association between the Dodd-Frank Act and an 

increase in some indicators of SIFI safety and soundness.89 However, we 

find no evidence of an association between the Dodd-Frank Act and 

increased funding costs for bank SIFIs. Our econometric analysis 

leverages the Dodd-Frank Act requirement that bank holding companies 

with total consolidated assets of $50 billion or more are subject to 

enhanced regulation by the Federal Reserve but other bank holding 

companies are not. Specifically, we compare funding costs, capital 

adequacy, asset quality, earnings, and liquidity for bank SIFIs and nonSIFI bank holding companies before and after enactment of the DoddFrank Act. All else being equal, the difference in the comparative 

differences is the inferred effect of the Dodd-Frank Act’s prudential 

requirements on bank SIFIs.

 

87One way banks may respond to changes in funding costs is by adjusting the spread 

between the cost of funds and the interest rate charged to borrowers. 

88For example, see Basel Committee on Banking Supervision, An Assessment of the 

Long Term Economic Impact of Stronger Capital and Liquidity Requirements (Basel, 

Switzerland: August 2010), and Basel Committee on Banking Supervision and Financial 

Stability Board, Assessing the Macroeconomic Impact of the Transition to Stronger Capital 

and Liquidity Requirements (Basel, Switzerland: August 2010). 

89See appendix VI for more information on our econometric analysis. 

Enhanced Prudential 

Standards Associated with 

Some Improvements in 

Bank SIFI Safety and 

Soundness but Not with 

Changes in Funding Costs 

for Bank SIFIs
Our approach allows us to partially differentiate changes in funding costs, 

capital adequacy, asset quality, earnings, and liquidity associated with the 

Dodd-Frank Act from changes due to other factors. However, several 

factors make isolating and measuring the impact of the act’s new 

requirements for SIFIs challenging. For example, the effects of the act 

cannot be differentiated from the effects of simultaneous changes in 

economic conditions, such as the pace of the recovery from the recent 

recession; regulations, such as those stemming from Basel III; or other 

changes, such as changes in credit ratings that differentially may affect 

bank SIFIs and other bank holding companies. In addition, some of the 

new requirements for SIFIs have yet to be fully implemented.

Page 52 GAO-16-169 Dodd-Frank Regulations

90 For 

example, in August 2015, the Federal Reserve issued a final rule that 

established risk-based capital surcharges for the largest, most 

interconnected SIFIs.91 Nevertheless, our estimates are suggestive of the 

initial effects of the act on bank SIFIs and provide a baseline against 

which to compare future trends.

Our analysis suggests that the Dodd-Frank Act has not been associated 

with a significant change in funding costs for bank SIFIs (see table 6). Our 

measure of funding cost captures the interest paid on borrowed funds and 

deposits. To the extent that the cost of credit provided by bank SIFIs is a 

function of their funding costs, the new requirements for SIFIs appear to 

have had little effect on the aggregate cost of credit to date via the 

funding cost channel.

 

90See appendix IV for the summary of rulemakings related to select Dodd-Frank Act 

provisions applicable to SIFIs. 

91Regulatory Capital Rules: Implementation of Risk-Based Capital Surcharges for Global 

Systemically Important Bank Holding Companies, 80 Fed. Reg. 49,082 (Aug. 14, 2015). 

This rule became effective on December 1, 2015.
Table 6: Estimated Changes in Bank Systematically Important Financial Institutions 

Page 53 GAO-16-169 Dodd-Frank Regulations

(Bank SIFIs) Funding Costs and Measures of Safety and Soundness Associated 

with the Dodd-Frank Act , from Third Quarter 2010 through Second Quarter 2015 

(Percentage Points)

Variable Measured as 

Estimated change 

and standard error 

of estimated 

change (percentage 

points) 

Funding cost 

indicator

Funding cost Interest expense as 

a percentage of 

interest-bearing 

liabilities 

0.06

(0.06)

Safety and 

soundness 

indicators

Capital adequacy Tangible common 

equity as a 

percentage of total 

assets 

1.47***

(0.26)

Total bank holding 

company equity as a 

percentage of total 

assets 

0.50

(0.39)

Asset quality Performing assets as 

a percentage of total 

assets 

0.43***

(0.12)

Earnings Earnings as a 

percentage of total 

assets 

0.33***

(0.12)

Liquidity Liquid assets as a 

percentage of shortterm liabilities 

3.04

(12.22)

Long-term liabilities 

as a percentage of 

total liabilities 

3.87***

(1.06)

Source: GAO analysis of data from the Federal Reserve Bank of Chicago and the Federal Reserve Board. | GAO-16-169

Notes: We analyzed data for top-tier bank holding companies that filed Form FR Y-9C from the first 

quarter of 2006 through the second quarter of 2015, including U.S. bank holding companies and U.S.-

based bank holding company subsidiaries of foreign banking organizations. We defined bank SIFIs 

as bank holding companies with assets of $50 billion or more. We estimated the effects of the new 

SIFI requirements on bank SIFIs by regressing the variables listed in the table on indicators for each 

bank holding company, indicators for each quarter, indicators for whether a bank holding company is 

a SIFI for quarters from the third in 2010 through the second in 2015, and other variables controlling 

for size, foreign exposure, securitization income, other nontraditional income, and participation in the 

Troubled Asset Relief Program. Estimated changes are the coefficients on the indicators for whether 

a bank holding company is a SIFI in quarters from the third in 2010 through the second in 2015. 

*=estimate is statistically significant at the 10 percent level. **=estimate is statistically significant at 

the 5 percent level. ***=estimate is statistically significant at the 1 percent level. Clustered standard 

errors are in parentheses. For more information on our methodology, see appendix VI.

Our estimates also suggest that the Dodd-Frank Act is associated with 

improvements in some measures of bank SIFIs’ safety and soundness. 
Bank SIFIs appear to be holding more tangible common equity as a 

percentage of assets than they otherwise would have held since DoddFrank Act enactment (see table 6). The quality of assets on the balance 

sheets of bank SIFIs seems to have improved since enactment. The act 

is also associated with improved liquidity as measured by the extent to 

which a bank holding company is using stable sources of funding and 

with higher earnings. However, capital adequacy as measured by total 

bank holding company equity and liquidity as measured by the capacity of 

a bank holding company’s liquid assets to cover its volatile liabilities have 

not clearly improved since enactment. Thus, the Dodd-Frank Act appears 

to be associated with improvements in some indicators of safety and 

soundness for bank SIFIs (relative to non-SIFI bank holding companies) 

but not others. See appendix VI for more details on our regression 

analysis.

We developed indicators associated with size, interconnectedness, 

leverage, and liquidity for institutions whose material financial distress or 

activities FSOC determines could pose a threat to U.S. financial stability 

and therefore should be subject to Federal Reserve supervision and 

enhanced prudential standards. As of July 2015, FSOC has designated 

four nonbank financial companies—American International Group, Inc. 

(AIG) and General Electric Capital Corporation (GECC) in July 2013, 

Prudential Financial, Inc. (Prudential) in September 2013, and MetLife, 

Inc. (MetLife) in December 2014. FSOC has determined that each of 

these institutions was predominately engaged in financial activities (that 

is, at least 85 percent of their revenues were derived from, or more than 

85 percent of their assets were related to, activities that were financial in 

nature). According to FSOC, at the time of the determinations, AIG was 

the third-largest insurance company in the United States and one of the 

largest insurers in the world; GECC was one of the largest holding 

companies in the United States and a significant source of credit to 

commercial and consumer customers; Prudential was one of the largest 

financial services companies in the United States providing a wide array 

of financial services, including group and individual life insurance, 

annuities, retirement-related products and services, and asset 

management; and MetLife was the largest publicly traded U.S. insurance 

organization and one of the largest financial services companies in the 

United States.

As we first reported in December 2012, the Dodd-Frank Act and its 

implementing rules may result in adjustments to size, interconnectedness, 

leverage, and liquidity characteristics of designated nonbanks over time. 

Page 54 GAO-16-169 Dodd-Frank Regulations

Indicators for Designated 

Nonbanks Provide 

Baselines for Assessing 

the Future Impact of 

Dodd-Frank Act Reforms
Size and interconnectedness reflect the potential for the financial distress 

of a single designated nonbank to affect the financial system and 

economy, while leverage and liquidity reflect a designated nonbank’s 

resilience to shocks or its vulnerability to financial distress. We developed 

the following indicators based on the characteristics of companies that 

FSOC reviews as part of its process for designating nonbanks:

· Size. Our indicator of size is total consolidated assets.

· Interconnectedness. Our indicators of interconnectedness are gross 

notional amounts of credit default swaps outstanding for which the 

designated nonbank is the reference entity and total debt outstanding 

(excluding deposit liabilities).

Page 55 GAO-16-169 Dodd-Frank Regulations

92

· Leverage. Our indicator of leverage is total equity as a percentage of 

total consolidated assets (excluding separate account assets).93

· Liquidity. Our indicator of liquidity is short-term debt (excluding deposit 

liabilities) as a percentage of total consolidated assets (excluding 

separate account assets).

We calculated each indicator for each designated nonbank for each 

quarter from the second quarter of 2012 to the second quarter of 2015. 

We also calculated the medians of each indicator for publicly traded 

 

92A credit default swap is an agreement between two parties in which one party (the 

protection seller) agrees to provide payment to the other party (the protection buyer) 

should a credit event occur against a third party debt issuer (known as the reference 

entity), a specified debt (known as the reference obligation), a basket of debts (known as 

the reference pool), a credit index (known as the reference index), or any other swap 

underlying reference in exchange for periodic payments from the protection buyer. The 

maximum amount of protection provided by the protection seller is equal to the notional 

amount of the swap.

93A life insurance company’s invested assets are held in two types of accounts: the 

general account and one or more separate accounts. The general account consists of 

assets and liabilities of the insurance company that are not allocated to separate 

accounts. Separate accounts consist of funds held by a life insurance company that are 

maintained separately from the insurer’s general assets. An insurer’s general account 

assets are obligated to pay claims arising from its insurance policies, annuity contracts, 

debt, derivatives, and other liabilities. By contrast, for non-guaranteed separate accounts, 

the investment risk is passed through to the contract holder; the income, gains, or losses 

(realized or unrealized) from assets allocated to the separate account are credited to or 

charged against the separate account. Therefore, non-guaranteed separate account 

liabilities are not generally directly exposed to the insurer’s credit risk because they are 

insulated from claims of creditors of the insurance company. However, in the case of 

separate account contracts supported by the general account through guarantees, holders 

of separate accounts may be directly exposed to the insurer’s credit risk.
banks and insurance companies with total consolidated assets of $50 

billion or more to provide a frame of reference.

Like our indicators for bank SIFIs, our indicators for designated nonbanks 

have some limitations. For example, the indicators do not identify causal 

links between changes in designated nonbanks’ characteristics and the 

act. Rather, the indicators track changes in the size, interconnectedness, 

leverage, and liquidity of designated nonbanks since the passage of the 

act to examine if the changes have been consistent with the goals of the 

act. However, other factors, such as capital standards for large, 

internationally active insurance companies may also affect designated 

nonbanks and, thus, the indicators. Furthermore, to the extent that a 

number of rules implementing provisions related to designated nonbanks 

have not yet been finalized, our indicators include the effects of these 

rules only insofar as designated nonbanks have changed their behavior in 

response to issued rules or in anticipation of expected rules. In this 

regard, our indicators provide baselines against which to compare future 

trends.

Figure 3 below shows the indicators for the period from second quarter 

2012 through second quarter 2015. As of July 2015, the Federal Reserve 

issued specific rules requiring designated nonbank financial companies to 

conduct resolution planning and stress testing, but additional rules are 

forthcoming.

Page 56 GAO-16-169 Dodd-Frank Regulations

94 Thus, the current values of our indicators are baselines 

against which to compare future trends as more rules for designated 

nonbanks are implemented. Our indicators allow for the following 

observations:

 

94In addition, both Treasury and the Federal Reserve assess fees directly on nonbank 

financial companies designated by FSOC. Under an interim final rule, Treasury assesses 

fees for a fund to cover FSOC’s and OFR’s operating and capital costs, as well as some 

other costs. See Assessment of Fees on Large Bank Holding Companies and Nonbank 

Financial Companies Supervised by the Federal Reserve Board To Cover the Expenses 

of the Financial Research Fund, 77 Fed. Reg. 29,884 (May 21, 2012). The Federal 

Reserve’s assessment covers the supervisory and regulatory responsibilities for the 

designated nonbank financial companies. See Supervision and Regulation Assessments 

for Bank Holding Companies and Savings and Loan Holding Companies With Total 

Consolidated Assets of $ 50 Billion or More and Nonbank Financial Companies 

Supervised by the Federal Reserve, 78 Fed. Reg. 52,391 (Aug. 23, 2013). Also, FDIC has 

the authority under the Dodd-Frank Act to assess designated nonbank financial 

companies to recover the portion of money obligated in resolving a failed institution under 

Title II that was not otherwise repaid within 60 months of obtaining the funds. Pub. L. No. 

111-203, § 210(o)(1)(D)(ii), 124 Stat. 1376, 1509-1510 (2010)(codified at 12 U.S.C. § 

5390(o)(1)(D)(ii)). 
· Based on their total assets, all four designated nonbanks are relatively 

large. They are all larger than the median publicly traded bank or 

insurance company with assets of $50 billion or more.

· Gross notional amounts of credit default swaps outstanding (for which 

designated nonbanks are the reference entities) have decreased 

since the second quarter of 2012, suggesting that the designated 

nonbanks are relatively less interconnected and thus have smaller 

potential spillover effects than in prior years by this measure, all else 

being equal.

· Total debt outstanding for one designated nonbank is relatively high, 

suggesting that it is more interconnected and thus has larger potential 

spillover effects than the other three designated nonbanks by this 

measure, all else being equal.

· Total equity as a percentage of nonseparate account assets varies 

across the four designated nonbanks, ranging from less than 10 

percent to almost 25 percent in the second quarter of 2015. This 

variation in leverage suggests that the designated nonbanks have 

varying resilience to shocks and financial distress by this measure, all 

else being equal.

· Short-term debt as a percentage of nonseparate account assets for 

one designated nonbank is relatively high, suggesting that it faces 

greater liquidity risk and is relatively less resilient than the other three 

designated nonbanks by this measure, all else being equal.

Page 57 GAO-16-169 Dodd-Frank Regulations
Figure 3: Indicators for Designated Nonbanks and Large Publicly Traded Banks and Insurance Companies, Second Quarter 

Page 58 GAO-16-169 Dodd-Frank Regulations

2012 through Second Quarter 2015

Notes: Designated nonbanks are American International Group (AIG), General Electric Capital 

Corporation (GECC), MetLife, and Prudential Financial (Prudential). Insurance is the median value for 

publicly traded insurance companies with assets of $50 billion or more. Banking is the median for 

publicly traded bank holding companies with assets of $50 billion or more. Dollar amounts are 

adjusted for inflation and measured in millions of second quarter 2015 dollars.
As we reported in December 2013, once fully implemented, some 

provisions in Title VII of the Dodd-Frank Act may help reduce systemic 

risks to financial markets by increasing margins posted for uncleared 

swaps.

Page 59 GAO-16-169 Dodd-Frank Regulations

95 Using data through the second quarter of 2015, we updated the 

set of indicators that we developed in our December 2013 report and 

updated in our December 2014 report to measure changes in the use of 

margin collateral for over-the-counter derivatives.96 This set of indicators 

may shed light on changes in the use of margin collateral associated with 

Dodd-Frank Act swap reforms as they are implemented, but has several 

key limitations, as described later in this section.97

Our margin indicators measure the fair value of collateral pledged by 

counterparties to secure over-the-counter derivatives contracts as a 

percentage of net current credit exposure to those counterparties for bank 

holding companies.98 To protect itself from the loss it would incur if a 

counterparty defaulted on a derivative contract, a swap entity could 

require counterparties to post margin collateral in an amount equal to or 

greater than its exposure to the contracts. An increase in collateral as a 

percentage of credit exposure suggests that holding companies have 

required their counterparties to post a greater amount of collateral against 

 

95See GAO-14-67.

96See GAO-14-67 and GAO-15-81.

97See appendix VII for Dodd-Frank Act rules implementing central clearing, capital, and 

margin swap reforms.

98Our indicators use data collected by the Federal Reserve on Form FR Y-9C, which 

currently requires bank holding companies with $10 billion or more in assets to report their 

net current credit exposure to counterparties in over-the-counter derivatives contracts and 

the fair value of the collateral pledged by those counterparties to secure the contracts. The 

fair value of collateral is the amount that would be received if the collateral were sold in an 

orderly transaction between market participants in its principal market on the 

measurement date. The net current credit exposure approximates the credit loss that a 

bank, financial, or savings and loan holding company would suffer if its counterparties 

defaulted on their over-the-counter derivatives contracts. Net current credit exposure to a 

counterparty is derived by first calculating the fair values of all derivatives contracts with 

that counterparty, where the fair value of a derivative contract is analogous to the fair 

value of collateral. If a legally enforceable bilateral netting agreement is in place, the fair 

values of all applicable derivatives contracts in the scope of the netting agreement with 

that counterparty are netted to a single amount, which may be positive, negative, or zero. 

Net current credit exposure across all counterparties is the sum of the gross positive fair 

values for counterparties without legal netting arrangements and the net current credit 

exposure for counterparties with legal netting agreements. 

Indicators Suggest That 

the Dodd-Frank Act Is 

Associated with Increased 

Use of Margin Collateral in 

Over-the-Counter 

Derivatives Transactions
their credit exposure due to derivatives contracts overall, which would be 

consistent with the purposes of the act’s swap reforms.

Figure 4 shows trends in our margin indicators from the second quarter of 

2009 through the second quarter of 2015. The rate of collateralization of 

net current credit exposure to all counterparties has increased from about 

71 percent in the third quarter of 2010 to about 104 percent in the second 

quarter of 2015, suggesting that holding companies generally required 

their counterparties to post a greater amount of collateral against their 

derivatives contracts. However, as discussed later, aggregate measures 

of collateralization rates can mask differences in collateralization rates for 

different counterparty types.

Page 60 GAO-16-169 Dodd-Frank Regulations

99

Figure 4: Fair Value of Collateral as a Percentage of Net Current Credit Exposure for Over-the-Counter Derivatives Contracts 

for Counterparty Type and for All Counterparty Types Combined, from Second Quarter 2009 through Second Quarter 2015 

(Percentage)

Notes: To calculate the fair value of collateral as a percentage of net current credit exposure for all 

counterparty types, we used quarterly data (from second quarter 2009 through second quarter 2015) 

on U.S. bank holding companies from Form FR Y-9C. For each quarter, we divided total fair value of 

collateral pledged by each counterparty type and by all counterparty types for all of these holding 

companies by total net current credit exposure to each counterparty type and to all counterparty types 

for all of these holding companies.

 

99A counterparty is one of the two people, companies, or organizations involved in a 

business transaction, as referred to by the other participant in the transaction.
Collateral posted by type of counterparty—banks and securities firms, 

monoline financial guarantors, hedge funds, sovereign governments, and 

corporate and all other counterparties—has increased (as a percentage 

of net credit exposure) between the third quarter of 2010 and the second 

quarter of 2015.

Page 61 GAO-16-169 Dodd-Frank Regulations

100 However, the rate of collateralization consistently 

differed by the type of counterparty, with hedge funds consistently posting 

more collateral as a percentage of credit exposure than other types of 

counterparties. As we reported in December 2013, according to OCC, the 

rates differ partly because swap dealers may require certain 

counterparties to post both initial and variation margin and other 

counterparties to post only variation margin. Depending on how the 

margin rules are finalized, the rates of collateralization for some 

counterparties may increase.

Our margin indicators, while suggestive, are subject to important 

limitations. First, they do not identify causal links between changes in 

collateralization and the Dodd-Frank Act, including its regulations. Rather, 

the set of indicators tracks changes in collateralization since the act’s 

passage to examine if the changes were consistent with the act’s goals 

for increasing collateralization. Second, both net current credit exposure 

and the fair value of collateral are as of a point in time because the fair 

values of derivatives contracts and collateral can fluctuate over time. 

Third, an average collateralization of 100 percent does not ensure that all 

current counterparty exposures have been eliminated, because one 

counterparty’s credit exposure may be overcollateralized and another’s 

undercollateralized. Fourth, our indicators measure the fair value of the 

collateral held against net current credit exposures but do not necessarily 

measure the risk of uncollateralized losses. The fair value of net current 

credit exposure does not fully account for the riskiness of any single swap 

contract. If a party has entered into riskier swaps, it is possible for the rate 

of collateralization to increase while the risk of uncollateralized losses 

also increases. Fifth, our indicators are market aggregates that may not 

reflect the collateralization rate for any single company. Finally, these 

indicators do not reflect collateralization rates for companies, such as 

stand-alone broker-dealers, that have credit exposure to counterparties in 

over-the-counter derivatives contracts but are not affiliated with a bank 

holding company.

 

100A monoline financial guarantor is a financial guaranty company that guarantees all 

scheduled interest and principal payments on its insured bonds and writes no other line of 

insurance.
We provided a draft of this report to CFPB, Federal Reserve, FDIC, OCC, 

NCUA, SEC, CFTC, and Treasury for review and comment. NCUA 

provided written comments that we have reprinted in appendix VIII. The 

regulators also provided technical comments, which we have 

incorporated, as appropriate. 

In its comment letter, NCUA concurred with our report and noted it 

acknowledges the difficulty of clearly identifying the impact of the DoddFrank Act regulations on community banks, credit unions and 

systemically important financial institutions. However, it said that it would 

like to see a deeper consideration of structure of the credit union industry, 

which may help to more clearly illustrate the effects of the Dodd-Frank Act 

on this sector. NCUA suggested using a set of indicators better-calibrated 

to credit union business models, which may be more helpful in assessing 

the effects of the Dodd-Frank Act on smaller credit unions. NCUA noted 

that despite caveats in our report, indicating comparisons between the 

credit union and community banking sectors may not be appropriate 

because readers with limited background in these sectors may not be 

able to judge the extent of the differences between these institutions. 

While we maintain that the indicators we developed are reasonable, in the 

report, we acknowledged that they are imperfect and have limitations. 

Specifically, as we noted in the report, these indicators developed for 

various sizes of credit unions do not reflect the experience of every 

individual credit union. We also stated in the report that while we 

presented similar indicators for banks and credit unions, comparisons 

between the two types of institutions may not be appropriate and that 

certain indicators may be more relevant than others for each type of 

institution. We also acknowledged in the report that these indicators are 

baselines against which to compare future trends between different sized 

credit unions, they are limited in their ability to assess the cumulative 

impact of Dodd-Frank Act regulations, and that care should be used in 

interpreting the results of this analysis.

We are sending copies of this report to the appropriate congressional 

committees and members, federal financial regulators, and the 

Department of the Treasury. This report will also be available at no 

charge on our website at http://www.gao.gov.

Should you or your staff have questions concerning this report, please 

contact me at (202) 512-8678 or evansL@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

Page 62 GAO-16-169 Dodd-Frank Regulations

Agency Comments

and Our Evaluation
the last page of this report. Key contributors to this report are listed in 

appendix IX.

Lawrance L. Evans, Jr.

Director, Financial Markets and

Community Investment

Page 63 GAO-16-169 Dodd-Frank Regulations
List of Addressees

The Honorable Mitch McConnell

Majority Leader

The Honorable Harry Reid

Minority Leader

United States Senate

The Honorable Paul Ryan

Speaker

The Honorable Nancy Pelosi

Minority Leader

House of Representatives

The Honorable Pat Roberts

Chairman

The Honorable Debbie Stabenow

Ranking Member

Committee on Agriculture, Nutrition and Forestry

United States Senate

The Honorable Thad Cochran

Chairman

The Honorable Barbara Mikulski

Ranking Member

Committee on Appropriations

United States Senate

The Honorable Richard Shelby

Chairman

The Honorable Sherrod Brown

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable John Thune

Chairman

The Honorable Bill Nelson

Ranking Member

Committee on Commerce, Science, and Transportation

United States Senate

Page 64 GAO-16-169 Dodd-Frank Regulations
The Honorable Mike Conaway

Chairman

The Honorable Collin Peterson

Ranking Member

Committee on Agriculture

House of Representatives

The Honorable Hal Rogers

Chairman

The Honorable Nita Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Fred Upton

Chairman

The Honorable Frank Pallone

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Jeb Hensarling

Chairman

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

Page 65 GAO-16-169 Dodd-Frank Regulations
Appendix I: Objectives, Scope, and 

Methodology

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(Dodd-Frank Act), various federal agencies are directed or have the 

authority to issue hundreds of regulations to implement the act’s 

provisions.

Page 66 GAO-16-169 Dodd-Frank Regulations

1 This report examines

· regulatory analyses conducted by the federal financial regulators and 

the Department of the Treasury (Treasury) in their Dodd-Frank Act 

rulemakings, including their assessments of which rules they 

considered to be major rules, and coordination between and among 

federal regulators on these rulemakings;2

· possible impact of promulgated Dodd-Frank Act provisions on 

community banks and credit unions and their business activities; and

· possible impact of selected Dodd-Frank Act provisions and their 

implementing regulations on financial market stability.

The agencies covered in our review are the federal financial regulators, 

the Financial Stability Oversight Council (FSOC), and the Treasury. We 

use the term “federal financial regulators” to refer to the Bureau of 

Consumer Financial Protection (commonly known as the Consumer 

Financial Protection Bureau, or CFPB), Commodity Futures Trading 

Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), the 

Board of Governors of the Federal Reserve System (Federal Reserve), 

Office of the Comptroller of the Currency (OCC), National Credit Union 

Administration (NCUA), and Securities and Exchange Commission 

(SEC).

To examine the regulatory analyses and coordination conducted by the 

federal financial regulators and Treasury, we focused our analysis on the 

final rules issued pursuant to the Dodd-Frank Act that became effective 

from July 23, 2014, through July 22, 2015, a total of 26 rules (see app. 

 

1Pub. L. No. 111-203, 124 Stat. 1376 (2010).

2As defined by the CRA, a major rule is generally one that the Office of Management and 

Budget finds has resulted in or is likely to result in (1) an annual effect on the economy of 

$100 million or more; (2) a major increase in costs or prices; or (3) significant adverse 

effects on competition, employment, investment, productivity, innovation, or on the ability 

of U.S.-based enterprises to compete with foreign-based enterprises in domestic and 

export markets. Pub. L. No. 104-121, tit. II, § 251, 110 Stat. 868 (1996) (codified at 5 

U.S.C. § 804(2)).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

II).

Page 67 GAO-16-169 Dodd-Frank Regulations

3 We compiled these rules from a website maintained by the Federal 

Reserve Bank of St. Louis that tracks Dodd-Frank Act regulations. We 

corroborated this information with staff from CFPB, Federal Reserve, 

FDIC, OCC, NCUA, SEC, CFTC, and the Treasury. We asked these staff 

to identify any other rulemaking that should be included. We reviewed 

federal statutes, regulations, and GAO studies on these rules as well as 

Federal Register releases that contain information on the regulatory 

analyses conducted by agencies and their coordination efforts. Using 

these materials, we identified the regulatory analyses, including benefitcost analysis, required to be conducted by the agencies as part of their 

Dodd-Frank Act rulemakings. Of the 26 rules in our scope, 15 were 

substantive regulations, meaning that they were generally subject to 

public notice and comment under the Administrative Procedure Act 

(APA)—and also required the agencies to conduct some form of 

regulatory analysis. For each of the 15 rules, we reviewed the Federal 

Register release of the final rule document and summarized the analyses 

conducted by the regulators and Treasury. Using GAO’s Federal Rules 

database, we found that 6 of the 15 rules were classified by the Office of 

Management and Budget as major rules under the Congressional Review 

Act (CRA). That is, they resulted or are likely to result in an annual impact 

on the economy of $100 million or more, a major increase in costs or 

prices, or significant adverse effects on competition, employment, 

investment, productivity, innovation, or on the ability of U.S.-based 

enterprises to compete with foreign-based enterprises in domestic or 

export markets. For agencies subject to Executive Order (E.O.) 12,866, 

such major rules would be considered significant regulatory actions and 

subject to formal cost-benefit analysis.4 We developed a data collection 

 

3We use rules, regulations, or rulemakings generally to refer to Federal Register notices of 

agency action pursuant to the Dodd-Frank Act, including final and interim final rules. It 

does not include orders, guidance, notices, interpretations, corrections, or policy 

statements. With this and our past four reports, we have reviewed all Dodd-Frank Act 

rules in effect as of July 22, 2015. See GAO-12-151, GAO-13-101, GAO-14-67, and 

GAO-15-81. 

4The CRA definition of a major rule is similar, but not identical, to the E.O. 12,866 

definition of a “significant regulatory action,” which means any regulatory action that is 

likely to result in a rule that may: (1) have an annual effect on the economy of $100 million 

or more or adversely affect in a material way the economy, a sector of the economy, 

productivity, competition, jobs, the environment, public health or safety, or State, local, or 

tribal governments or communities; (2) create a serious inconsistency or otherwise 

interfere with an action taken or planned by another agency; (3) materially alter the 

budgetary impact of entitlements, grants, user fees, or loan programs or the rights and 

obligations of recipients thereof; or (4) raise novel legal or policy issues.
Appendix I: Objectives, Scope, and 

Methodology

instrument to compare and assess the regulatory analysis conducted for

the major rules against the principles outlined in OMB Circular A-4, which 

provides guidance to federal agencies on the development of regulatory 

analysis.

Page 68 GAO-16-169 Dodd-Frank Regulations

5

We also reviewed the Dodd-Frank Act and Federal Register releases to 

identify the interagency coordination or consultation requirements as 

required by the act for the 26 rules in our scope. As a part of this review, 

an analyst looked for key words relating to coordination in the Federal 

Register releases and the requirements for coordination in the DoddFrank Act and recorded this information in a spreadsheet. An attorney 

then reviewed related rulemakings and acts and also independently 

evaluated each determination documented in the spreadsheet to reach 

concurrence on the assessment.

To assess the possible impact of the Dodd-Frank Act on community 

banks and credit unions, we used our September 2012 report, which 

identified provisions expected to affect some or all community banks and 

credit unions, to identify select final rules that became effective by 

October 2015.6 While we started with a larger population of rules, we 

specifically reviewed nine final rules that were identified by the community 

banks and credit unions as potentially having an impact for the purpose of 

this report. We reviewed the Federal Register releases for these final 

rules and relevant material on the act and the final rules, as well as five 

studies by federal and state regulators, industry associations, and 

academics on the potential impact of the final rules on community banks 

and credit unions. All but one study we reviewed relied on surveys of 

banks, usually contacted through banking association member lists. The 

final study consisted of a study of all payment card networks. We 

identified these studies through electronic searches of Google and 

Google Scholar using keywords such as the name of the rule and “impact 

on community banks or credit unions.” Two GAO social science analysts 

reviewed the quality of each study’s research design and methods and 

 

5As independent regulatory agencies that are not required to follow the economic analysis 

requirements of E.O. 12,866, the financial regulatory agencies also are not required to 

follow OMB Circular A-4. However, Circular A-4 is an example of best practices for 

agencies to follow when conducting regulatory analyses, and the financial regulatory 

agencies have told us that they follow the guidance in spirit.

6GAO, Community Banks and Credit Unions: Impact of Dodd Frank Act Depends Largely 

on Future Rulemakings, GAO-12-881 (Washington, D.C.: Sept. 13, 2012).
Appendix I: Objectives, Scope, and 

Methodology

identified related limitations. Because most of the studies relied on 

surveys of non-probability, convenience samples of banks with low 

response rates, the study results cannot be used to make inferences 

about the population of all small banks. However, the results do provide 

useful insights into the experiences of surveyed banks with Dodd-Frank 

Act rules.

We conducted semi-structured interviews with federal regulators, the 

Independent Community Bankers of America (ICBA), the Credit Union 

National Association (CUNA), the National Federation of Independent 

Business, the U.S. Chamber of Commerce, and a non-generalizable 

sample of four state credit union and community bank associations and 

eight community banks and credit unions about the impact of the final 

rules on community banks and credit unions. Between July and 

September 2015, we interviewed representatives from two state 

community banking and two state credit union associations from Georgia, 

Illinois, Louisiana, and Pennsylvania. We also interviewed representatives 

from four community banks and four credit unions that fell in each of the 

four asset categories: under $250 million, between $250 million and $500 

million, between $500 million and $1 billion, and between $1 billion and 

$10 billion. In determining our sample, we relied to the extent possible on 

entities interviewed for our September 2012 report for continuity.

Page 69 GAO-16-169 Dodd-Frank Regulations

7 As two 

state bank community banking and credit union associations that we 

previously interviewed declined to be re-interviewed, we used a 

methodology similar to our September 2012 report to select 

replacements. Using SNL Financial data on the number and percentage 

of banks and credit unions in each state within different asset classes, we 

selected one state banking association and one state credit union 

association that (1) represented a higher-than-average percentage of 

institutions within specific asset classes and (2) represented a larger 

number of institutions within that asset class than other states.8

 

7At the time of the September 2012 report, many Dodd-Frank Act regulations had not 

been promulgated and the information we obtained from the respondents was based on 

the expected impact of potential regulations. As of June 2015, about 250 Dodd-Frank Act 

regulations had been promulgated. By interviewing the same entities that previously 

thought about the potential impact, we intended to obtain information on how the actual 

impact compared with the expected impact and the extent to which the rule-making 

agencies addressed concerns raised by these entities. 

8SNL Financial is a private service that aggregates and disseminates data from quarterly 

regulatory reports, among other information. 
Appendix I: Objectives, Scope, and 

Methodology

Additionally, we interviewed three community banks and two credit unions 

that we previously interviewed in our September 2012 report and 

randomly selected and interviewed one community bank and two credit 

unions for the remainder. While the information we obtained from the 

interviews provides useful insights, it cannot be used to make 

generalizations about the experiences of all community banks and credit 

unions since the selection of interviewees relied on non-probability 

sampling methods. Nevertheless, we purposely sought to achieve variety 

in our sample as a way to gain access to a range of experiences within 

the target population.

We also analyzed bank quarterly Reports of Condition and Income (Call 

Reports) data for depository institutions and credit unions obtained from 

FFIEC and NCUA, respectively, from the first quarter of 2006 through the 

second quarter of 2015. We used these data to construct indicators of the 

cumulative costs associated with complying with Dodd-Frank Act 

regulations, including numbers of employees per $1 million in assets,

non-interest expenses as a percentage of assets, and earnings as a 

percentage of assets.

Page 70 GAO-16-169 Dodd-Frank Regulations

9 We used the same data to construct indicators 

associated with business lines that may be affected by Dodd-Frank Act 

regulations, including residential mortgage lending as a percentage of 

assets. We assessed the reliability of the FFIEC and NCUA data by 

reviewing relevant documentation and electronically testing the data for

missing values, outliers, and invalid values, and we found the data to be 

sufficiently reliable for purpose of constructing indicators associated with 

compliance costs and business lines for banks and credit unions. 

Although we analyzed the impact of a number of specific Dodd-Frank Act 

provisions on community banks and credit unions, assessing the extent to 

which these provisions or their related regulations should apply to such 

institutions was beyond the scope of our work.

To analyze the impact of the Dodd-Frank Act on financial market stability, 

we updated several indicators developed in our prior reports with data 

through the second quarter of 2015.10 We also created new indicators for 

banks that are systemically important financial institution (bank SIFI) and 

 

9Non-interest expenses are for resources other than borrowed funds and generally include 

the costs of resources (such as compliance staff or consulting services) banks and credit 

unions are likely to employ to comply with regulations.

10See GAO-13-101, GAO-14-67, and GAO-15-81.
Appendix I: Objectives, Scope, and 

Methodology

nonbank financial institutions designated by the FSOC for supervision by 

the Federal Reserve (designated nonbanks).

Page 71 GAO-16-169 Dodd-Frank Regulations

11 We updated indicators to 

monitor changes in size, complexity, leverage, and liquidity of bank SIFIs 

and added new indicators of interconnectedness, which captures direct or 

indirect linkages between financial institutions that may transmit distress 

from one institution to another. We updated our econometric analysis 

estimating changes in measures of the (1) funding cost for bank SIFIs 

and (2) safety and soundness of bank SIFIs. Since we began developing 

and tracking indicators for bank SIFIs, FSOC has designated four 

nonbank institutions for enhanced supervision by the Federal Reserve. As 

such, we added new indicators associated with the size, 

interconnectedness, leverage, and liquidity of these institutions. Finally, 

we updated our indicators monitoring the extent to which certain swap 

reforms are consistent with the act’s goals of reducing risk.12 For those 

parts of our methodology that involved the analysis of computerprocessed data from Bloomberg, the Federal Reserve Bank of Chicago, 

the Federal Reserve, the National Information Center, and the Bureau of 

Economic Analysis, we assessed the reliability of these data by reviewing 

relevant documentation, and electronically testing the data for missing 

values, outliers, and invalid values. We also interviewed Federal Reserve 

staff about Federal Reserve’s data. We determined the data were 

sufficiently reliable for our purposes—monitoring changes in SIFI 

characteristics, estimating changes in the cost of credit bank SIFIs 

provided and their safety and soundness, and assessing the amount of 

margin collateral that over-the-counter derivatives counterparties used.

We conducted this performance audit from April 2015 to December 2015 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

 

11The Dodd-Frank Act does not use “systemically important financial institution” (SIFIs). 

Academics and other experts commonly use this term to refer to bank holding companies 

with $50 billion or more in total consolidated assets and nonbank financial companies 

designated by FSOC for Federal Reserve supervision and subject to enhanced prudential 

standards under the Dodd-Frank Act. For this report, we refer to these bank and nonbank 

financial companies as bank SIFIs and designated nonbanks, respectively.

12Swaps include interest rate swaps, commodity-based swaps, and broad-based credit 

default swaps. Security-based swaps include single-name and narrow-based credit default 

swaps and equity-based swaps.
Appendix I: Objectives, Scope, and 

Methodology

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Page 72 GAO-16-169 Dodd-Frank Regulations
Appendix II: Dodd-Frank Act Rules Effective as 

of July 22, 2015

The following table lists the 26 Dodd-Frank Act rules that we identified as 

having effective dates during the scope of our review—from July 23, 

2014, through July 22, 2015. Fifteen of the rules were substantive—

meaning they are generally subject to the notice and comment

requirements of the Administrative Procedure Act (APA)—and, of those, 6 

were major.

Page 73 GAO-16-169 Dodd-Frank Regulations

1

Table 7: Dodd-Frank Act Rules Effective from July 23, 2014, through July 22, 2015

Critical dates

Agency stated it 

conducted analysis under

Rulemaking

Responsible 

regulatoraPublished Effectiveb

Federal 

Register 

number

Substantive 

rule

Regulatory 

Flexibility 

Actc

Paperwork 

Reduction 

Actc

DoddFrank Act 

provision

Major 

rule

Integration of 

National Bank 

and Federal 

Savings 

Association 

Regulations and 

Licensing Rules

OCC 5/18/2015 7/1/2015 80 Fed. 

Reg. 

28,346

Yes Yes Yes §§ 314, 

604, 612, 

623

No

Regulation 

SBSR—

Reporting and 

Dissemination 

of SecurityBased Swap 

Information

SEC 3/19/2015 5/18/2015 80 Fed. 

Reg. 

14,564

Yes Not required Yes §§ 763, 

766

Yes 

Security-Based 

Swap Data 

Repository 

Registration, 

Duties, and 

Core Principles

SEC 3/19/2015 5/18/2015 80 Fed. 

Reg. 

14,438

Yes Not required Yes § 763 Yes 

 

1As defined by the Congressional Review Act, a major rule is generally one that the Office 

of Management and Budget finds has resulted in or is likely to result in (1) an annual effect 

on the economy of $100 million or more; (2) a major increase in costs or prices; or (3) 

significant adverse effects on competition, employment, investment, productivity, 

innovation, or on the ability of U.S.-based enterprises to compete with foreign-based 

enterprises in domestic and export markets. 5 U.S.C. § 804(2).

Appendix II: Dodd-Frank Act Rules Effective 

as of July 22, 2015
Appendix II: Dodd-Frank Act Rules Effective as 

of July 22, 2015

Page 74 GAO-16-169 Dodd-Frank Regulations

Critical dates

Agency stated it 

conducted analysis under

Rulemaking

Responsible 

regulatoraPublished Effectiveb

Federal 

Register 

number

Substantive 

rule

Regulatory 

Flexibility 

Actc

Paperwork 

Reduction 

Actc

DoddFrank Act 

provision

Major 

rule

Homeownership 

Counseling 

Organizations 

Lists and HighCost Mortgage 

Counseling 

Interpretive 

Rule

CFPB 4/21/2015 4/21/2015 80 Fed. 

Reg. 

22,091

No Not applicable Not 

required

§ 1450 No

Submission of 

Credit Card 

Agreements 

Under the Truth 

in Lending Act 

(Regulation Z)

CFPB 4/17/2015 4/17/2015 80 Fed. 

Reg. 

21,153

Yes Not required Not

required

§§ 1061, 

1100A

No

Credit Risk 

Retention

FDIC, FHFA, 

Federal 

Reserve, 

HUD, OCC, 

SEC

12/24/2014 2/23/2015 79 Fed. 

Reg. 

77,602

Yes Not requireddYes § 941 Yes 

Annual Stress 

Test—Schedule 

Shift and 

Adjustments to 

Regulatory 

Capital 

Projections

OCC 12/3/2014 1/2/2015 79 Fed. 

Reg. 

71,630

Yes Not required Not

required

§165 No

Appraisals for 

Higher-Priced 

Mortgage Loans 

Exemption 

Threshold 

Adjustment

CFPB,OCC, 

Federal 

Reserve

12/30/2014 1/1/2015 79 Fed. 

Reg. 

78,296

No Not applicable Not 

required

§ 1471 No 

Home Mortgage 

Disclosure 

(Regulation C) 

Adjustment to 

Asset-Size 

Exemption 

Threshold

CFPB 12/29/2014 1/1/2015 79 Fed. 

Reg. 

77,854

No Not required Not 

applicable

§ 1094 No

Truth in Lending 

Act (Regulation 

Z) Adjustment 

to Asset-Size 

Exemption 

Threshold

CFPB 12/29/2014 1/1/2015 79 Fed. 

Reg. 

77,855

No Not applicable Not 

required

§ 1461 No 
Appendix II: Dodd-Frank Act Rules Effective as 

of July 22, 2015

Page 75 GAO-16-169 Dodd-Frank Regulations

Critical dates

Agency stated it 

conducted analysis under

Rulemaking

Responsible 

regulatoraPublished Effectiveb

Federal 

Register 

number

Substantive 

rule

Regulatory 

Flexibility 

Actc

Paperwork 

Reduction 

Actc

DoddFrank Act 

provision

Major 

rule

Annual Stress 

Test

FDIC 11/21/2014 1/1/2015 79 Fed. 

Reg. 

69,365

No Not required Not

required

§ 165 No 

Concentration 

Limits on Large 

Financial 

Companies

Federal 

Reserve

11/14/2014 1/1/2015 79 Fed. 

Reg. 

68,095

No Not required Yes § 622 No

Consumer 

Leasing 

(Regulation M)

CFPB, 

Federal 

Reserve

9/22/2014 1/1/2015 79 Fed. 

Reg. 

56,482

No Not applicable Not 

required

§§ 1029, 

1100E

No

Truth in Lending 

(Regulation Z)

CFPB, 

Federal 

Reserve

9/22/2014 1/1/2015 79 Fed. 

Reg. 

56,483

No Not applicable Not 

required

§§ 1029, 

1100E

No

Truth in Lending 

(Regulation Z) 

Annual 

Threshold 

Adjustments 

(CARD ACT, 

HOEPA and 

ATR/QM)

CFPB 8/15/2014 1/1/2015 79 Fed 

Reg. 

48,015

No Not applicable Not 

required 

§§ 1061, 

1100A, 

1411, 

1412, 1431

No

Financial 

Market Utilities

Federal 

Reserve

11/5/2014 12/31/2014 79 Fed. 

Reg. 

65,543

Yes Yese Not 

required

§ 805 No

Defining Larger 

Participants of 

the International 

Money Transfer 

Market

CFPB 9/23/2014 12/1/2014 79 Fed. 

Reg. 

56,631

Yes Not required Not 

required

§ 1024 No

Capital Plan 

and Stress Test 

Rules

Federal 

Reserve

10/27/2014 11/26/2014 79 Fed. 

Reg. 

64,026

No YeseYes § 165 No

Asset-Backed 

Securities 

Disclosure and 

Registration

SEC 9/24/2014 11/24/2014 79 Fed. 

Reg. 

57,184

Yes Not required Yes § 942 Yes

Electronic Fund 

Transfers 

(Regulation E)

CFPB 9/18/2014 11/17/2014 79 Fed. 

Reg. 

55,970

Yes Not required Not 

required

§ 1073 No

Nationally 

Recognized 

Statistical 

Rating 

Organizations

SEC 9/15/2014 11/14/2014 79 Fed. 

Reg. 

55,078

Yes Yes Yes §§ 932, 

936, 938, 

943

Yes
Appendix II: Dodd-Frank Act Rules Effective as 

of July 22, 2015

Page 76 GAO-16-169 Dodd-Frank Regulations

Critical dates

Agency stated it 

conducted analysis under

Rulemaking

Responsible 

regulatoraPublished Effectiveb

Federal 

Register 

number

Substantive 

rule

Regulatory 

Flexibility 

Actc

Paperwork 

Reduction 

Actc

DoddFrank Act 

provision

Major 

rule

Amendments to 

the 2013 

Mortgage Rules 

Under the Truth 

in Lending Act

(Regulation Z)

CFPB 11/3/2014 11/3/2014 79 Fed. 

Reg. 

65,300

Yes Not required Not 

required 

§§ 1061, 

1100A, 

1411, 1412

No

Amendment to 

the Annual 

Privacy Notice 

Requirement 

Under the 

GrammLeach-Bliley Act 

(Regulation P) 

CFPB 10/28/2014 10/28/2014 79 Fed. 

Reg. 

64,057

Yes Not required Not 

required 

§§ 1061, 

1093

No

Unfair or 

Deceptive Acts 

or Practices; 

Technical 

Amendments

NCUA 10/3/2014 10/3/2014 79 Fed. 

Reg. 

59,627

No Not required Not 

required

§§ 1092 No

Application of 

‘‘Security-based 

Swap Dealer’’ 

and ‘‘Major 

Security-Based 

Swap 

Participant’’ 

Definitions to 

Cross-Border 

Security-Based 

Swap Activities

SEC 7/9/2014 9/8/2014 79 Fed. 

Reg. 

39,068

Yes Not required Yes §§ 761, 

929P

Yes

Government 

Securities Act 

Regulations; 

Replacement of 

References to 

Credit Ratings 

and Technical 

Amendments

Treasury 7/8/2014 8/7/2014 79 Fed. 

Reg. 

38,451

Yes Not required Not 

requiredf

§ 939A No

Source: GAO analysis of Federal Register notices and Congressional Review Act filings. | GAO-16-169

Note: In this report, we use the terms “rules,” “regulations,” or “rulemakings” generally to refer to 

Federal Register notices of agency action pursuant to the Dodd-Frank Act, including regulations or 

rules that are final or interim final. With this and our past four reports, we have reviewed all DoddFrank Act rules in effect as of July 22, 2015.

aBoard of Governors of the Federal Reserve System (Federal Reserve), Bureau of Consumer 

Financial Protection (commonly known as the Consumer Financial Protection Bureau, or CFPB) , 

Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), 

Federal Housing Finance Agency (FHFA), National Credit Union Administration (NCUA), Office of the 
Appendix II: Dodd-Frank Act Rules Effective as 

of July 22, 2015

Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC), and Department of 

Housing and Urban Development (HUD). The Department of the Treasury (Treasury) is included here 

due to its rulemaking authority.

b

To determine our scope for this review, we considered the earliest effective date shown in the final 

Federal Register releases for each Dodd-Frank Act rulemaking. If the effective date shown fell within 

our scope, the rule was included even if subsequent rulemakings or agency decisions changed the 

effective date of the rule or if the rule contained subsequent effective dates.

c

Instances in which the agency certified that the final regulation would not have a significant economic 

impact on a substantial number of small entities, and therefore no further analysis under the 

Regulatory Flexibility Act was necessary, are marked as not required. Instances in which the agency 

stated that no new collection of information would be required by the regulation also are marked as 

not required. Instances in which an agency determined that the Regulatory Flexibility Act or the 

Paperwork Reduction Act did not apply are marked as not applicable.

dSEC prepared an initial Regulatory Flexibility Act analysis; all agencies certified that the rule would 

not have a significant economic impact on a substantial number of small entities.

e

The Federal Reserve certified that the final rule would not have a significant economic impact on a 

substantial number of small entities, but prepared a final regulatory flexibility analysis.

f

The Paperwork Reduction Act applies to rulemakings in which an agency by rule creates a new 

paperwork burden on regulated entities or modifies an existing burden. In this rulemaking, Treasury 

was silent as to whether the agency had conducted an analysis under the Paperwork Reduction Act. 

In connection with this review, Treasury stated that this rule does not include “information collections” 

as that term is defined in the Paperwork Reduction Act, and that as a result, it was not required to 

reference the Paperwork Reduction Act in the preamble to the rule

Page 77 GAO-16-169 Dodd-Frank Regulations
Appendix III: Coordination for Dodd-Frank Act 

Rules Effective as of July 22, 2015

The following table lists the 26 Dodd-Frank Act rules that we identified as 

having effective dates during the scope of our review (from July 23, 2014, 

through July 22, 2015), whether the Dodd-Frank Act required interagency 

or international coordination, and the nature of required coordination (if 

any).

Page 78 GAO-16-169 Dodd-Frank Regulations

1 The rulemaking agencies coordinated as required by the DoddFrank Act for 11 of the 26 regulations we reviewed (see app. III). For the 

remaining 15 of the 26 rules we reviewed, the agencies were not required 

by the Dodd-Frank Act to coordinate.

Table 8: Evidence of Coordination on Dodd-Frank Act Rules Effective from July 23, 2014, through July 22, 2015

Critical dates

Rulemaking

Responsible 

regulatoraPublished Effectiveb Required?

Agency conducted 

required coordination?c Nature of coordination

Integration of 

National Bank 

and Federal 

Savings 

Association 

Regulations and 

Licensing Rules

OCC 5/18/2015 7/1/2015 No Not required Not required

Regulation 

SBSR—Reporting 

and 

Dissemination of 

Security-Based 

Swap Information

SEC 3/19/2015 5/18/2015 Yesd, eYes SEC consulted and 

coordinated with CFTC, 

prudential regulators, and 

foreign regulatory 

authorities.

Security-Based 

Swap Data 

Repository 

Registration, 

Duties, and Core 

Principles

SEC 3/19/2015 5/18/2015 Yesd, eYes SEC consulted and 

coordinated with CFTC,

prudential regulators and 

foreign regulatory 

authorities.

Homeownership 

Counseling 

Organizations 

Lists and HighCost Mortgage 

Counseling 

Interpretive Rule

CFPB 4/21/2015 4/21/2015 No Not required Not required

 

1Our analysis of the coordination is based solely on review of the Federal Register

notices. This approach would not uncover any coordination activities that are not reported 

by the agencies in the Federal Register.

Appendix III: Coordination for Dodd-Frank 

Act Rules Effective as of July 22, 2015
Appendix III: Coordination for Dodd-Frank Act 

Rules Effective as of July 22, 2015

Page 79 GAO-16-169 Dodd-Frank Regulations

Critical dates

Rulemaking

Responsible 

regulatora Published Effectiveb Required?

Agency conducted 

required coordination?c Nature of coordination

Submission of 

Credit Card 

Agreements 

Under the Truth in 

Lending Act 

(Regulation Z)

CFPB 4/17/2015 4/17/2015 YesfYes CFPB consulted, or 

offered to consult with the 

prudential regulators, 

Treasury and the FTC.

Credit Risk 

Retention

FDIC, FHFA, 

Federal 

Reserve, HUD, 

OCC, SEC

12/24/2014 2/23/2015 YesgYes Jointly issued.

Appraisals for 

Higher-Priced 

Mortgage Loans 

Exemption 

Threshold 

Adjustment

CFPB, OCC, 

Federal Reserve

12/30/2014 1/1/2015 YeshYes Jointly issued.

Annual Stress 

Test—Schedule 

Shift and 

Adjustments to 

Regulatory 

Capital 

Projections

OCC 12/3/2014 1/2/2015 No Not required Not required

Home Mortgage 

Disclosure 

(Regulation C) 

Adjustment to 

Asset-Size 

Exemption 

Threshold

CFPB 12/29/14 1/1/2015 No Not required Not required

Truth in Lending 

Act (Regulation Z) 

Adjustment to 

Asset-Size 

Exemption 

Threshold

CFPB 12/29/2014 1/1/2015 No Not required Not required

Annual Stress 

Test

FDIC 11/21/2014 1/1/2015 No Not required Not required

Concentration 

Limits on Large 

Financial 

Companies

Federal Reserve 11/14/2014 1/1/2015 No Not required Not required

Consumer 

Leasing 

(Regulation M)

CFPB, Federal 

Reserve

9/22/2014 1/1/2015 No Not required Not required

Truth in Lending 

(Regulation Z)

CFPB, Federal 

Reserve

9/22/2014 1/1/2015 No Not required Not required
Appendix III: Coordination for Dodd-Frank Act 

Rules Effective as of July 22, 2015

Page 80 GAO-16-169 Dodd-Frank Regulations

Critical dates

Rulemaking

Responsible 

regulatora Published Effectiveb Required?

Agency conducted 

required coordination?c Nature of coordination

Truth in Lending 

(Regulation Z) 

Annual Threshold 

Adjustments 

(CARD ACT, 

HOEPA and 

ATR/QM)

CFPB 8/15/2014 1/1/2015 No Not required Not required

Financial Market 

Utilities

Federal Reserve 11/5/2014 12/31/2014 YesiYes Federal Reserve 

consulted with CFTC, the 

Financial Stability 

Oversight Council, and 

SEC.

Defining Larger 

Participants of the 

International 

Money Transfer 

Market

CFPB 9/23/2014 12/1/2014 YesfYes CFPB consulted with or 

offered to consult with 

FTC, Federal Reserve, 

FDIC, OCC, NCUA, and 

SEC.

Capital Plan and 

Stress Test Rules

Federal Reserve 10/27/2014 11/26/2014 No Not required Not required

Asset-Backed 

Securities 

Disclosure and 

Registration

SEC 9/24/2014 11/24/2014 No Not required Not required

Electronic Fund 

Transfers 

(Regulation E)

CFPB 9/18/2014 11/17/2014 YesfYes CFPB consulted with or 

offered to consult with 

prudential regulators and 

FTC.

Nationally 

Recognized 

Statistical Rating 

Organizations

SEC 9/15/2014 11/14/2014 No Not required Not required

Amendments to 

the 2013 

Mortgage Rules 

Under the Truth in 

Lending Act

(Regulation Z)

CFPB 11/3/2014 11/3/2014 YesfYes CFPB consulted with or 

offered to consult with 

prudential regulators, 

SEC, HUD, FHFA, FTC, 

Department of Veterans 

Affairs, Department of 

Agriculture, and 

Treasury. 

Amendment to 

the Annual 

Privacy Notice 

Requirement 

Under the 

GrammLeach-Bliley Act 

(Regulation P) 

CFPB 10/28/2014 10/28/2014 YesfYes CFPB consulted and 

coordinated with SEC, 

CFTC and the National 

Association of Insurance 

Commissioners. CFPB 

also consulted with other 

appropriate federal 

agencies.
Appendix III: Coordination for Dodd-Frank Act 

Rules Effective as of July 22, 2015

Page 81 GAO-16-169 Dodd-Frank Regulations

Critical dates

Rulemaking

Responsible 

regulatora Published Effectiveb Required?

Agency conducted 

required coordination?c Nature of coordination

Unfair or 

Deceptive Acts or 

Practices; 

Technical 

Amendments

NCUA 10/3/2014 10/3/2014 No Not required Not required

Application of 

‘‘Security-based 

Swap Dealer’’ 

and ‘‘Major 

Security-Based 

Swap Participant’’ 

Definitions to 

Cross-border 

Security-Based 

Swap Activities

SEC 7/9/2014 9/8/2014 Yesd, eYeseSEC consulted and 

coordinated with CFTC, 

prudential regulators, and 

foreign regulatory 

authorities.

Government 

Securities Act 

Regulations; 

Replacement of 

References to 

Credit Ratings 

and Technical 

Amendments

Treasury 7/8/2014 8/7/2014 No Not required Not required

Source: GAO analysis of Federal Register notices. | GAO-16-169

Note: In this report, we use the terms “rules,” “regulations,” or “rulemakings” generally to refer to 

Federal Register notices of agency action pursuant to the Dodd-Frank Act, including regulations or 

rules that are final or interim final. With this and our past four reports, we have reviewed all DoddFrank Act rules in effect as of July 22, 2015.

aBoard of Governors of the Federal Reserve System (Federal Reserve), Bureau of Consumer 

Financial Protection (commonly known as the Consumer Financial Protection Bureau, or CFPB), 

Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), 

Federal Housing Finance Agency (FHFA), Federal Trade Commission (FTC), National Credit Union 

Administration (NCUA), Office of the Comptroller of the Currency (OCC), Securities and Exchange 

Commission (SEC), and Department of Housing and Urban Development (HUD), and the Department 

of the Treasury (Treasury).

b

To determine our scope for this review, we considered the earliest effective date shown in the final 

Federal Register releases for each Dodd-Frank Act rulemaking. If the effective date shown fell within 

our scope, the rule was included even if subsequent rulemakings or agency decision changed the 

effective date of the rule or if the rule contained subsequent effective dates

cSee Nature of Coordination for additional notes on evidence of coordination.

dAccording to section 712(a)(2) of the Dodd-Frank Act, before commencing any rulemaking or issuing 

an order regarding swaps, swap dealers, major swap participants, swap data repositories, derivative 

clearing organizations with regard to swaps, persons associated with a swap dealer or major swap 

participants, eligible contract participants, or swap execution facilities pursuant to Subtitle A of Title 

VII of the Dodd-frank Act, SEC shall consult and coordinate to the extent possible with CFTC and the 

prudential regulators for the purposes of assuring regulatory consistency and comparability, to the 

extent possible. 15 U.S.C. § 8302(a)(2).

eAccording to section 752(a) of the act, to promote effective and consistent global regulation of swaps 

and security-based swaps, CFTC, SEC, and the prudential regulators, as appropriate, shall consult 

and coordinate with foreign regulatory authorities on the establishment of consistent international 
Appendix III: Coordination for Dodd-Frank Act 

Rules Effective as of July 22, 2015

standards with respect to the regulation (including fees) of swaps, security-based swaps, swap 

entities, and security-based swap entities and may agree to such information-sharing arrangements 

as may be deemed necessary or appropriate in the public interest or for the protection of investors, 

swap counterparties, and security-based swap counterparties. 15 U.S.C. § 8325(a).

fSection 1022(b)(2)(B) of the Dodd-Frank Act requires CFPB, in prescribing a rule under the federal 

consumer financial laws, to consult with the appropriate prudential regulators or other federal 

agencies before proposing a rule and during the comment process regarding consistency with 

prudential, market or systemic objectives administered by such agencies. 12 U.S.C. § 5512(b)(2)(B). 

Additionally, under section 1015 of the act, CFPB must coordinate with SEC, CFTC, FTC, and other 

federal agencies and state regulators, as appropriate, to promote consistent regulatory treatment of

consumer financial and investment products and services. 12 U.S.C. § 5495.

gSection 941 of the Dodd-Frank Act requires SEC and federal banking agencies to jointly prescribe 

regulations to require any securitizer to retain an economic interest in a portion of the credit risk for 

any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells, or 

conveys to a third party. 15 U.S.C. § 78o-11(b)(1).

hSection 1471 of the Dodd-Frank Act generally requires the Federal Reserve, OCC, FDIC, NCUA, 

FHFA, and CPFB to jointly prescribe regulations to implement the section. 15 U.S.C. § 

1639h(b)(4)(A).

iSection 805(a)(1) of the Dodd-Frank Act requires the Federal Reserve to consult with the Financial 

Stability Oversight Council, CFTC, SEC, and supervisory agencies, defined as the appropriate federal 

banking agency under 12 U.S.C § 1813(q), when issuing rules regarding risk management standards. 

12 U.S.C. § 5464(a)(1).

Page 82 GAO-16-169 Dodd-Frank Regulations
Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act Provisions 

Applicable to Designated Nonbanks

The Dodd-Frank Act contains several provisions—including designation 

by the Financial Stability Oversight Council (FSOC) for supervision by the 

Board of Governors of the Federal Reserve System (Federal Reserve)

and enhanced prudential standards—that apply to nonbank financial 

companies if FSOC determines that material financial distress at the 

company or the nature, scope, size, scale, concentration, 

interconnectedness, or mix of activities at the company could pose a 

threat to U.S. financial stability. Enhanced prudential standards also apply 

to bank holding companies with $50 billion or more in total consolidated 

assets. For this report, we refer to those nonbanks financial companies as 

designated nonbanks and bank holding companies as systemically 

important banks (bank SIFI), respectively. Table 9 summarizes some of 

the Dodd-Frank Act provisions and the rulemakings, including their status, 

to implement those provisions as of July 22, 2015.

Table 9: Rulemakings Implementing Selected Dodd-Frank Act Provisions Applicable to Designated Nonbanks and Bank SIFIs 

Page 83 GAO-16-169 Dodd-Frank Regulations

and Their Status as of July 22, 2015

Dodd-Frank Act provision Rulemaking status

Financial Stability Oversight Council (FSOC) designation of Nonbank 

Financial Companies for Board of Governors of the Federal Reserve System 

(Federal Reserve) supervision—Section 113 authorizes FSOC to determine that 

a nonbank financial company shall be subject to enhanced prudential standards 

and supervision by the Federal Reserve if FSOC determines that (i) material 

financial distress or (ii) the nature, scope, size, scale, concentration, 

interconnectedness, or mix of activities at the nonbank financial company could 

pose a threat to the financial stability of the United States.

FSOC’s final rule and interpretative guidance describe the manner in which FSOC 

intends to apply statutory considerations (related to a six-category framework for 

size, interconnectedness, substitutability, leverage, liquidity risk, and maturity 

mismatch), and the procedures FSOC intends to follow, when making a 

determination to designate a nonbank financial company for Federal Reserve 

supervision under section 113 of the act. 

FSOC final rule and interpretative guidance, 

Authority to Require Supervision and Regulation 

of Certain Nonbank Financial Companies, 77 

Fed. Reg. 21,637 (Apr. 11, 2012).

On July 8, 2013, FSOC voted to designate two 

nonbank financial companies for Federal 

Reserve supervision. On September 19, 2013, 

FSOC voted to designate a third nonbank 

financial company for Federal Reserve 

supervision. On December 18, 2014, FSOC 

voted to designate a fourth nonbank financial 

company for Federal Reserve supervision.

Enhanced supervision and prudential standards—Sections 165 and 166 

require the Federal Reserve to impose enhanced prudential standards and early 

remediation requirements on bank holding companies, including foreign banking 

organizations with total consolidated assets of $50 billion or more that are treated 

as bank holding companies for purposes of the Bank Holding Company Act of 

1956, and nonbank financial companies designated by FSOC to prevent or 

mitigate risks to U.S. financial stability.a

According to the Federal Reserve, the standards for foreign banking organizations 

and foreign nonbank financial companies supervised by the Federal Reserve are 

broadly consistent with the standards proposed for large U.S. bank SIFIs and 

designated nonbanks. The final rule requires foreign banking organizations with 

U.S. nonbranch assets, as defined in the final rule, of $50 billion or more to form a 

U.S. intermediate holding company and imposes enhanced risk-based and 

leverage capital requirements, liquidity requirements, risk-management 

requirements, and stress-testing requirements on the U.S. intermediate holding 

company. 

Federal Reserve final rule, Enhanced Prudential 

Standards for Bank Holding Companies and 

Foreign Banking Organizations, 79 Fed. Reg. 

17,240 (Mar. 27, 2014). The March 2014 final 

rule does not impose enhanced prudential 

standards on nonbank financial companies 

designated by FSOC for supervision by the 

Federal Reserve.

Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act

Provisions Applicable to Designated Nonbanks
Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act Provisions 

Applicable to Designated Nonbanks

Page 84 GAO-16-169 Dodd-Frank Regulations

Dodd-Frank Act provision Rulemaking status

Enhanced risk-based capital and leverage requirements required under 

section 165(b)(1)(A)(i)—capital plans: Bank holding companies with $50 billion 

or more in total consolidated assets and nonbank financial companies 

designated by FSOC must comply with the requirements of any regulations 

adopted by the Federal Reserve on capital plans and stress tests, including 

the Federal Reserve’s capital plan rule, which requires such companies to 

submit an annual capital plan to the Board for review that, together with the 

proposed stress tests (below), would demonstrate to the Board that the 

company has robust, forward-looking capital planning processes that account 

for their unique risks and permit continued operations during times of stress.

b

Intermediate holding companies of foreign banking organizations generally are 

subject to the same U.S. risk-based and leverage capital standards that apply 

to a U.S. bank holding company. An intermediate holding company of a 

foreign banking organization with total consolidated assets of $50 billion or 

more is subject to the Federal Reserve’s capital plan rule.

Federal Reserve final rule, Enhanced Prudential 

Standards for Bank Holding Companies and 

Foreign Banking Organizations, 79 Fed. Reg. 17, 

240 (Mar. 27, 2014). The March 2014 final rule 

does not impose enhanced prudential standards 

on nonbank financial companies designated by 

FSOC for supervision by the Federal Reserve.

Federal Reserve final rule, Capital Plan and 

Stress Test Rules, 79 Fed. Reg. 64,026 (Oct. 27, 

2014).

Enhanced risk-based capital and leverage requirements required under 

section 165(b)(1)(A)(i)—capital surcharges: The Federal Reserve intends to 

issue a proposal imposing a quantitative risk-based capital surcharge for all or 

a subgroup of bank holding companies with $50 billion or more in total 

consolidated assets, certain foreign banking organizations, and nonbank 

financial companies designated by FSOC based on the Basel capital 

surcharge for globally systemically important banks (G-SIB).cThe Federal 

Reserve stated that it may, through a future rulemaking, impose a capital 

surcharge to an intermediate holding company of a foreign banking 

organization that is determined to be a domestic systemically important bank, 

consistent with the Basel Committee on Banking Supervision’s (Basel 

Committee) regime or a similar framework. 

Intention to propose included in January 5, 2012, 

proposed rule. Enhanced Prudential Standards 

and Early Remediation Requirements for 

Covered Companies, 77 Fed. Reg. 594, and 

December 28, 2012, proposed rule. Enhanced 

Prudential Standards and Early Remediation 

Requirements for Foreign Banking Organizations 

and Foreign Nonbank Financial Companies, 77 

Fed. Reg. 76,628. Risk-Based Capital 

Guidelines: Implementation of Capital 

Requirements for Global Systemically Important 

Bank Holding Companies, 79 Fed. Reg. 75,473 

(Dec. 18, 2014), proposed rule.

Enhanced liquidity requirements required under section 165(b)(1)(A)(ii)—

liquidity risk management standards: Bank holding companies with $50 billion 

or more in total consolidated assets and nonbank financial companies 

designated by FSOC would be subject to liquidity risk-management standards 

that require those companies to, among other things, project cash flow needs 

over various time horizons, stress test the projections at least monthly, 

determine a liquidity buffer, and maintain a contingency funding plan that 

identifies potential sources of liquidity strain and alternative sources of funding. 

Large foreign banking organizations with combined U.S. assets of $50 billion 

or more must meet liquidity risk-management standards that are broadly 

similar to the standards proposed for U.S. firms.

Federal Reserve final rule, Enhanced Prudential 

Standards for Bank Holding Companies and 

Foreign Banking Organizations, 79 Fed. Reg. 

17,240 (Mar. 27, 2014). The March 2014 final 

rule does not impose enhanced prudential 

standards on nonbank financial companies 

designated by FSOC for supervision by the 

Federal Reserve.

Enhanced liquidity requirements required under section 165(b)(1)(A)(ii)—Basel 

liquidity ratios: The banking agencies have adopted a final rule that 

implements a quantitative liquidity requirement consistent with the liquidity 

coverage ratio standard established by the Basel Committee. The rule applies 

to large, internationally active banking organizations, generally, bank holding 

companies, certain savings and loan holding companies, and depository 

institutions with more than $250 billion in assets or more than $10 billion in onbalance sheet foreign exposure and their consolidated subsidiary depository 

institutions with $10 billion or more in total consolidated assets. The Federal 

Reserve is separately adopting a modified liquidity coverage ratio for bank 

holding companies without significant insurance or commercial operations that 

have $50 billion or more in total consolidated assets that are not internationally 

active.

Federal Reserve, Federal Deposit Insurance 

Corporation (FDIC), and Office of the Comptroller 

of the Currency (OCC) final rule, Liquidity 

Coverage Ratio: Liquidity Risk Measurement, 

Standards, 79 Fed. Reg. 61,440 (Oct. 10, 2014).
Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act Provisions 

Applicable to Designated Nonbanks

Page 85 GAO-16-169 Dodd-Frank Regulations

Dodd-Frank Act provision Rulemaking status

Credit exposure reports required under section 165(d)(2): Section 165 also 

requires the Federal Reserve to impose credit exposure reporting 

requirements on bank holding companies with $50 billion or more in total 

consolidated assets, certain foreign banking organizations, and nonbank 

financial companies designated by FSOC. The joint proposed rule would 

require those companies to report credit exposures to other covered 

companies and credit exposures that other covered companies have to that 

company.

Federal Reserve and FDIC proposed rule, 

Resolution Plans and Credit Exposure Reports 

Required, 76 Fed. Reg. 22,648 (Apr. 22, 2011).

Concentration limits required under section 165(e): As required by the act, the 

Federal Reserve would prohibit bank holding companies with $50 billion or 

more in total consolidated assets, certain large foreign banking organizations 

and intermediate holding companies, and nonbank financial companies 

designated by FSOC from having credit exposure to any unaffiliated company 

that exceeds 25 percent of the company’s capital stock and surplus or total 

consolidated regulatory capital. The Federal Reserve proposed a more 

stringent credit exposure limit of 10 percent between the largest, more 

complex financial institutions.

Proposal included in January 5, 2012, proposed 

rule and December 28, 2012, proposed rule. 

Stress tests required under section 165(i): Bank holding companies with $50 

billion or more in total consolidated assets, certain foreign banking 

organizations, and nonbank financial companies designated by FSOC are 

required by the act to conduct semi-annual company-run stress tests, and the 

Federal Reserve is required to conduct an annual stress test on each of those 

companies.dThe final rule builds on the stress tests required under the capital 

plans that large, complex bank holding companies submitted to the Federal 

Reserve for supervision under the Supervisory Capital Assessment Program 

in 2009, the subsequent Comprehensive Capital and Analysis Review in 2011, 

and the capital plan rule effective December 30, 2011.

Federal Reserve final rule for U.S. bank holding

companies with $50 billion or more in total 

consolidated assets and nonbank financial 

companies designated by FSOC for Federal 

Reserve supervision, Company-Run Stress Test 

Requirements, 77 Fed. Reg. 62,378 (Oct. 12, 

2012). Federal Reserve final rule for foreign 

banking organizations, Enhanced Prudential 

Standards for Bank Holding Companies and 

Foreign Banking Organizations, 79 Fed. Reg. 

17,240 (Mar. 27, 2014). Federal Reserve final 

rule, Capital Plan and Stress Test Rules, 79 Fed. 

Reg. 64,026 (Oct. 27, 2014). FDIC final rule, 

Annual Stress Test, 79 Fed. Reg. 69,365 (Nov. 

21, 2014). OCC final rule, Annual Stress-Test—

Schedule Shift and Adjustments to Regulatory 

Capital Projects, 79 Fed. Reg. 71,630 (Dec. 3, 

2014). FHFA final rule, Stress Testing of 

Regulated Entities, 78 Fed. Reg. 59219 (Sept. 

26, 2013).

Resolution plans required under section 165(d)(1): Section 165 also requires 

the Federal Reserve to require resolution plans from bank holding companies 

with $50 billion or more in total consolidated assets, certain foreign banking 

organizations, and nonbank financial companies designated by FSOC. The 

joint final rule requires each plan to include information about the company’s 

ownership structure, core business lines, and critical operations, and a 

strategic analysis of how the SIFI can be resolved under the U.S. Bankruptcy 

Code in a way that would not pose systemic risk to the financial system.

Federal Reserve and FDIC final rule, Resolution 

Plans Required. 76 Fed. Reg. 67,323 (Nov. 1, 

2011).

Debt-to-equity limits under section 165(j): Section 165(j) provides that the 

Federal Reserve must require bank holding companies with $50 billion or 

more in total consolidated assets and nonbank financial companies supervised 

by the Federal Reserve to maintain a debt-to-equity ratio of no more than 15-

to-1, upon a determination by the Council that (i) such company poses a grave 

threat to the financial stability of the United States and (ii) the imposition of 

such a requirement is necessary to mitigate the risk that the company poses to 

Federal Reserve final rule, Enhanced Prudential 

Standards for Bank Holding Companies and 

Foreign Banking Organizations, 79 Fed. Reg. 

17,240 (Mar. 27, 2014). The March 2014 final 

rule does not impose enhanced prudential 

standards on nonbank financial companies 

designated by FSOC for supervision by the 
Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act Provisions 

Applicable to Designated Nonbanks

Page 86 GAO-16-169 Dodd-Frank Regulations

Dodd-Frank Act provision Rulemaking status

U.S. financial stability. The final rules implement the 15-to-1 debt-to-equity 

limitation for U.S. bank holding companies and foreign banking organizations 

for which FSOC has made the grave-threat determination.

Federal Reserve.

Early remediation requirements under section 166: Section 166 requires the 

Federal Reserve, in consultation with FSOC and FDIC, to prescribe 

regulations to provide for the early remediation of financial distress of bank

holding companies with $50 billion or more in total consolidated assets, certain 

foreign banking organizations, and nonbank financial companies designated 

by FSOC. The proposed requirements would include a number of triggers for 

remediation, including capital levels, stress test results, and risk-management 

weaknesses. In certain situations, the Federal Reserve would impose 

restrictions on asset growth, acquisitions, capital distributions, executive 

compensation, and other activities that the Federal Reserve deems 

appropriate. The proposed rule for foreign banking organizations adapts these 

requirements to their U.S. operations, tailored to address the risks to U.S. 

financial stability posed by the U.S. operations of foreign banking 

organizations and taking into consideration their structure.

Proposal included in January 5, 2012, proposed 

rule and December 28, 2012, proposed rule.

FDIC Orderly Liquidation Authority—Title II gives FDIC new orderly liquidation 

authority to act as a receiver in the event of a failure of certain systemically 

important financial companies, including certain bank holding companies and 

nonbank financial companies that pose significant risk to the financial stability of 

the United States. The rule establishes a more comprehensive framework for the 

implementation of the liquidation authority and is intended to provide greater 

transparency to the process.

FDIC final rule, Certain Orderly Liquidation 

Authority Provisions under Title II of the DoddFrank Wall Street Reform and Consumer 

Protection Act,

76 Fed. Reg. 41,626 (July 15, 2011).

Federal Reserve authority to impose mitigatory actions on certain nonbank 

financial companies determined to pose a grave threat to financial stability—

Section 121(a) allows the Federal Reserve, with a two-thirds vote by FSOC, to 

impose certain additional restrictions on bank holding companies with $50 billion or 

more in total consolidated assets and nonbank financial companies designated by 

FSOC determined to pose a grave threat to the financial stability of the United 

States, including limiting mergers and acquisitions, requiring the company to 

terminate activities, or requiring the company to sell or transfer assets or offbalance-sheet items to unaffiliated entities.

No rules proposed or issued.

Collins Amendment—Section 171(b) requires the appropriate federal banking 

agencies to establish permanent minimum risk-based capital and leverage floors 

on insured depository institutions, depository institution holding companies, and 

nonbank financial companies designated by FSOC.

Under the final rule, these institutions must calculate their floors using the minimum 

risk-based capital and leverage requirements under the prompt corrective action 

framework implementing section 38 of the Federal Deposit Insurance Act.

Federal Reserve, FDIC, and OCC final rule , 

Risk-Based Capital Standards: Advanced Capital 

Adequacy Framework—Basel II; Establishment 

of a Risk-Based Capital Floor,

76 Fed. Reg. 37,620 (June 28, 2011).

Concentration limit/ liability cap on large financial institutions—Section 622 

establishes, subject to recommendations by FSOC, a financial sector concentration 

limit that generally prohibits a financial company from merging or consolidating 

with, acquiring all or substantially all of the assets of, or otherwise acquiring control 

of another company if the resulting company’s consolidated liabilities would exceed 

10 percent of the aggregate consolidated liabilities of all financial companies.

Federal Reserve final rule, Concentration Limits 

on Large Financial Companies, 79. Fed. Reg. 

68,095 (Nov. 14, 2014).

Source: GAO analysis. | GAO-16-169

a Section 165 of the Dodd-Frank Act directs the Federal Reserve to impose enhanced prudential 

standards for bank holding companies with $50 billion or more in total consolidated assets, certain 

foreign banking organizations, and nonbank financial companies designated by FSOC regarding 

overall risk management, which also were proposed in the January 5, 2012 rule. Section 115 of the 
Appendix IV: Summary of Rulemakings 

Related to Selected Dodd-Frank Act Provisions 

Applicable to Designated Nonbanks

act authorizes FSOC to recommend to the Federal Reserve additional enhanced prudential standards 

for bank holding companies with $50 billion or more in total consolidated assets, certain foreign 

banking organizations, and nonbank financial companies designated by FSOC.

bBank SIFIs already must comply with the capital plan rule. The Federal Reserve issued its final 

capital plans rule on December 1, 2011 (see Capital Plans,76 Fed. Reg. 74,631). On September 30, 

2013, the Federal Reserve issued an interim final rule that amends the capital plan and stress test 

rules and clarifies how bank SIFIs must incorporate the new U.S. Basel III-based final capital rules 

into their capital plan submissions and stress tests. See Regulations Y and YY: Application of the 

Revised Capital Framework to the Capital Plan and Stress Test Rules, 78 Fed. Reg. 59,779.

c

In November 2011, the Financial Stability Board identified 29 G-SIBs and indicated it would update 

this list annually each November. The Financial Stability Board last updated this list on November 11, 

2013. The updated list contains 29 G-SIBs; the same eight U.S, bank SIFIs were designated as GSIBs in 2011, 2012, and 2013.

dSection 165(i)(2) of the act requires that any bank holding company with more than $10 billion in total 

consolidated assets and that is regulated by a federal financial regulatory agency also be subject to 

company-run stress tests. The Federal Reserve issued a separate rule to implement this requirement.

See Annual Company-Run Stress Test Requirements for Banking Organizations With Total 

Consolidated Assets Over $10 Billion Other Than Covered Companies, 77 Fed. Reg. 62,396 (Oct. 12, 

2012).

Page 87 GAO-16-169 Dodd-Frank Regulations
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

We developed indicators to monitor changes in the size, 

interconnectedness, complexity, leverage, and liquidity of bank holding 

companies with $50 billion or more in total consolidated assets (bank 

systemically important financial institutions or bank SIFIs). As we first 

reported in December 2012, some provisions of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act (Dodd-Frank Act) and 

related rules may result in adjustments to the these characteristics of 

bank SIFIs over time.

Page 88 GAO-16-169 Dodd-Frank Regulations

1 The size, interconnectedness, and complexity 

indicators are intended to capture the potential for a bank SIFI’s financial 

distress to affect the financial system and economy (spillover effects). 

The leverage and liquidity indicators are intended to capture a bank SIFI’s 

resilience to shocks or its vulnerability to financial distress.

We used the following data to construct our indicators:

· quarterly data on the price index for gross domestic product, which we 

obtained from the Bureau of Economic Analysis for the period from 

the second quarter of 2006 to the second quarter of 2015.

· annual data on numbers and locations of legal entities for holding 

companies obtained from the Board of Governors of the Federal 

Reserve System for the period from the second quarter of 2010 to the 

second quarter of 2015.

· quarterly data on second tier bank holding companies, which we 

obtained from the Board of Governors of the Federal Reserve System 

via the National Information Center for the period from the second 

quarter of 2006 to the second quarter of 2015.

· quarterly balance sheet and income statement data that bank holding 

companies report on Form FR Y-9C, which we obtained from the 

Federal Reserve Bank of Chicago for the period from the second 

quarter of 2006 to the second quarter of 2015, and 

· quarterly data on gross notional amounts of credit default swaps 

outstanding by reference entity, which we obtained from Bloomberg 

for the period from the third quarter of 2010 to the second quarter of 

2015.

 

1See GAO, Dodd-Frank Act Regulations: Agencies’ Efforts to Analyze and Coordinate 

Their Rules, GAO-13-101 (Washington, D.C.: Dec. 18, 2012).

Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Data
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Our indicators analysis generally includes all top-tier U.S. bank holding 

companies with total consolidated assets of $1 billion or more that filed 

Form FR Y-9C for one or more quarters during the period from the first 

quarter of 2006 to the second quarter of 2015, including any U.S.-based 

bank holding company subsidiaries of foreign banking organizations that 

on their own have total consolidated assets of $1 billion or more and that 

filed Form FR Y-9C. We chose the threshold of $1 billion in assets to 

match the threshold for reporting Form FR Y-9C starting in the first 

quarter of 2015.

Page 89 GAO-16-169 Dodd-Frank Regulations

2 We defined bank SIFIs as bank holding companies with 

total assets of $50 billion or more. We defined large bank SIFIs as bank 

holding companies with total assets of $500 billion or more and we 

defined other bank SIFIs as bank holding companies with total assets of 

at least $50 billion but less than $500 billion. We defined non-SIFI bank 

holding companies as bank holding companies with less than $50 billion 

in total assets.

We calculate each of our indicators for each bank holding company in our 

sample for each quarter from the first quarter of 2006 to the second 

quarter of 2015, with the exceptions of our complexity indicators, which 

we calculate only for bank SIFIs as of the second quarter of each year 

from 2006 to 2015, and one of our interconnectedness indicators, which 

we calculate only for bank SIFIs for the period from the third quarter of 

2010 to the second quarter of 2015.. We then calculate the median value 

of each indicator for each group of bank holding companies—large bank 

SIFIs, other bank SIFIs, all bank SIFIs, non-SIFI bank holding companies, 

and all bank holding companies, to the extent possible—and track the 

median values over time. Finally, we assess the changes in the median 

values of the indicators for large bank SIFIs and other banks SIFIs 

between the second or third quarter of 2010 and the second quarter of 

2015, depending on the indicator. We say that an indicator has increased 

or decreased if it has changed by 5 percent or more, depending on the 

direction of the change, and we say that an indicator has remained about 

the same if it has changed by less than 5 percent.

 

2Between 2006 and 2014, top-tier bank holding companies with assets of $500 million or 

more were generally required to file Form FR Y-9C. However, the Federal Reserve Board 

raised the threshold to $1 billion starting in the first quarter of 2015.

Sample

Methodology
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Our indicators analysis has limitations. For example, the indicators do not 

identify causal links between changes in bank SIFI characteristics and the 

act. Rather, the indicators track changes in the size, interconnectedness, 

complexity, leverage, and liquidity of bank SIFIs since the Dodd-Frank Act 

was passed to examine whether the changes were consistent with the 

act. However, other factors—including the economic downturn, 

international banking standards agreed upon by the Basel Committee on 

Banking Supervision (Basel Committee), and monetary policy actions—

also affect bank holding companies and, thus, the indicators.

Page 90 GAO-16-169 Dodd-Frank Regulations

3 These 

factors may have a greater effect on bank SIFIs than the Dodd-Frank Act. 

In addition, some rules implementing bank SIFI-related provisions have 

not yet been finalized or fully implemented. Thus, changes in our 

indicators include the effects of these rules only insofar as bank SIFIs 

have changed their behavior in response to issued rules and in 

anticipation of expected rules. In this sense, our indicators provide 

baselines against which to compare future trends. Furthermore, each 

indicator has its own specific limitations, which we expand on below.

An institution’s size is associated with the potential for its financial 

distress to affect the financial system and the broader economy (spillover 

effects). We developed three indicators of size—the number of bank 

holding companies with assets of $50 billion or more, total assets of the 

consolidated bank holding company as reported on its balance sheet 

(adjusted for inflation and measured in billions of second quarter 2015 

dollars), and the market share of the bank holding company (equal to its 

total assets as a percentage of the total assets of all of the holding 

companies we analyzed).

These indicators do not include an institution’s off-balance-sheet activities 

and thus may understate the amount of financial services or 

intermediation an institution provides. Furthermore, asset size alone is not 

an accurate determinant of systemic significance because an institution’s 

 

3The Basel Committee has agreed on a new set of risk-based capital, leverage, liquidity, 

and other requirements for banking institutions (Basel III requirements). Additionally, the 

Financial Stability Board and the Basel Committee have agreed on new capital and other 

requirements applicable to designated globally systemically important banks. U.S. banking 

regulators have implemented some of these requirements.

Limitations

Indicators

Size
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

systemic significance also depends on other factors, such as its 

complexity and interconnectedness. Furthermore, some bank SIFIs are 

U.S.-based bank holding company subsidiaries of foreign banking 

organizations, and the size of these bank SIFIs may not reflect the 

potential for the parent company’s financial distress to affect the financial 

system and the economy.

We observed the following changes in our size indicators over the period 

from the third quarter of 2010 to the second quarter of 2015:

· The number of bank SIFIs had decreased by three between the third 

quarter of 2010 and the second quarter of 2015. The number of large 

bank SIFIs had decreased by one and the number of other bank SIFIs 

had decreased by two.

· Median assets of bank SIFIs had decreased by about 12 percent. 

Median assets of large bank SIFIs have increased by about 35 

percent, while median assets of other bank SIFIs had decreased by 

about 9 percent.

· Median market shares of bank SIFIs had decreased by about 7 

percent. Median market shares of large bank SIFIs had increased by 

about 42 percent while median market shares of other bank SIFIs had 

remained about the same.

Table 10: Indicators of Size for U.S. Bank Holding Companies, from Third Quarter 2010 to Second Quarter 2015

Page 91 GAO-16-169 Dodd-Frank Regulations

Large 

bank SIFIs

Other 

bank 

SIFIs

All bank 

SIFIs

Non-SIFI bank 

holding 

companies

All bank 

holding 

companies

Numbers of bank SIFIs 2010 Q3 7 29 36 428 464

2011 Q2 7 27 34 434 468

2012 Q2 7 27 34 448 482

2013 Q2 6 27 33 454 487

2014 Q2 6 27 33 469 502

2015 Q2 6 27 33 485 518

Median assets (billions of 

second quarter 2015 

dollars)

2010 Q3 1319.64 144.37 177.67 2.07 2.29

2011 Q2 1338.97 139.14 176.20 2.07 2.20

2012 Q2 1396.42 122.36 170.67 2.08 2.21

2013 Q2 1709.58 121.50 154.91 2.09 2.21

2014 Q2 1770.88 120.15 151.37 2.11 2.25

2015 Q2 1774.99 131.76 156.47 2.22 2.41

Median market shares 

(percentage)

2010 Q3 7.39 0.81 0.99 0.01 0.01

2011 Q2 7.60 0.79 1.00 0.01 0.01
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Page 92 GAO-16-169 Dodd-Frank Regulations

Large 

bank SIFIs

Other 

bank 

SIFIs

All bank 

SIFIs

Non-SIFI bank 

holding 

companies

All bank 

holding 

companies

2012 Q2 8.09 0.71 0.99 0.01 0.01

2013 Q2 10.32 0.73 0.94 0.01 0.01

2014 Q2 10.43 0.71 0.89 0.01 0.01

2015 Q2 10.51 0.78 0.93 0.01 0.01

Source: GAO analysis of data from the Board of Governors of the Federal Reserve System, the Bureau of Economic Analysis, and the Federal Reserve Bank of Chicago. | GAO-16-169

Notes: Bank-SIFIs is used for Bank Systemically Important Financial Institutions. We used data on 

top-tier U.S. bank holding companies with total consolidated assets of $1 billion or more that filed 

Form FR Y-9C for one or more quarters during the period from the first quarter of 2006 to the second 

quarter of 2015, including any U.S.-based bank holding company subsidiaries of foreign banking 

organizations that on their own have total consolidated assets of $1 billion or more and that filed Form 

FR Y-9C. We chose the threshold of $1 billion in assets to match the threshold for reporting Form FR 

Y-9C starting in the first quarter of 2015. We defined bank SIFIs as bank holding companies with total 

assets of $50 billion or more, large bank SIFIs as bank holding companies with total assets of $500 

billion or more, other bank SIFIs as bank holding companies with total assets of at least $50 billion 

but less than $500 billion, and non-SIFI bank holding companies as bank holding companies with less 

than $50 billion in total assets.

Interconnectedness reflects direct or indirect linkages between financial 

institutions that may transmit distress from one financial institution to 

another (spillover effects). We developed two indicators of 

interconnectedness based on those that Financial Stability Oversight 

Council uses in the first stage of its process for designating nonbank 

SIFIs—gross notional amount of credit default swaps outstanding for 

which the institution is the reference entity (adjusted for inflation and 

measured in millions of second quarter 2015 dollars) and total debt 

outstanding (adjusted for inflation and measured in second quarter 2015 

dollars).4 We measure total debt outstanding as the difference between 

total liabilities and total deposits.

We observed the following changes in our interconnectedness indicators:

· Median credit default swaps gross notional amounts among bank 

SIFIs that are reference entities have decreased by about 57 percent. 

 

4A credit default swap is an agreement between two counterparties in which one party, the 

protection seller, agrees to provide payment (the protection leg) to the other party, the 

protection buyer, should a credit event occur against a specified debt (known as the 

reference obligation), a basket of debts (known as the reference pool), a debt issuer 

(known as the reference entity), a credit index (known as the reference index), or any 

other swap underlying reference in exchange for periodic payments (the fee leg) from the 

protection buyer. The maximum amount of protection provided by the protection seller is 

equal to the notional amount of the swap.

Interconnectedness
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Median credit default swaps gross notional amounts for large bank 

SIFIs that are reference entities have decreased by about 55 percent 

while median credit default swaps gross notional amounts for other 

bank SIFIs that are reference entities have decreased by about 75 

percent. We note that few bank SIFIs are reference entities—only 6-7 

large bank SIFIs are reference entities and only 3-4 other bank SIFIs 

are reference entities in any one quarter.

· Median total debt outstanding for bank SIFIs has decreased by about 

32 percent. Median debt outstanding for large bank SIFIs has 

decreased by about 21 percent, while median debt outstanding for 

other bank SIFIs has decreased by about 9 percent.

Table 11: Indicators of Interconnectedness for U.S. Bank Systemically Important Financial Institutions (bank SIFIs), from Third 

Page 93 GAO-16-169 Dodd-Frank Regulations

Quarter 2010 to Second Quarter 2015

Large 

bank 

SIFIs

Other 

bank 

SIFIs

All 

bank 

SIFIs

Non-SIFI 

bank holding 

companies

All bank 

holding 

companies

Median gross notional 

amounts of credit default 

swaps outstanding for 

which the company is the 

reference entity (billions of 

second quarter 2015 

dollars)

2010 Q3 $70.10 $28.86 $61.59 na na

2011 Q2 72.86 28.58 62.30 na na

2012 Q2 79.56 24.95 64.64 na na

2013 Q2 58.88 18.51 49.62 na na

2014 Q2 43.04 9.98 34.37 na na

2015 Q1 31.36 7.33 26.43 na na

Median total debt 

outstanding (billions of 

second quarter 2015 

dollars)

2010 Q3 858.34 22.97 40.16 0.21 0.24

2011 Q2 876.58 22.51 41.41 0.19 0.2

2012 Q2 853.09 23.14 31.45 0.16 0.17

2013 Q2 791.23 17.11 30.02 0.16 0.17

2014 Q2 722.69 21.09 29.79 0.16 0.18

2015 Q2 681.57 20.93 27.31 0.18 0.19

Source: GAO analysis of data from Bloomberg, the Board of Governors of the Federal Reserve System, the Bureau of Economic Analysis, and the Federal Reserve Bank of Chicago. | GAO-16-169

Notes: We used data on top-tier U.S. bank holding companies with total consolidated assets of $1 

billion or more that filed Form FR Y-9C for one or more quarters during the period from the first 

quarter of 2006 to the second quarter of 2015, including any U.S.-based bank holding company 

subsidiaries of foreign banking organizations that on their own have total consolidated assets of $1

billion or more and that filed Form FR Y-9C. We chose the threshold of $1 billion in assets to match 

the threshold for reporting Form FR Y-9C starting in the first quarter of 2015. We defined bank SIFIs

as bank holding companies with total assets of $50 billion or more, large bank SIFIs as bank holding 

companies with total assets of $500 billion or more, other bank SIFIs as bank holding companies with 

total assets of at least $50 billion but less than $500 billion, and non-SIFI bank holding companies as 

bank holding companies with less than $50 billion in total assets.

Institutions that are more complex are likely to be more difficult to resolve 

and therefore cause significantly greater disruption to the wider financial 

system and economic activity if they fail (spillover effects). Resolution via 

Complexity
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

a bankruptcy or under the backstop orderly liquidation authority in title II

of Dodd-Frank Act may be more difficult if a large number of legal entities 

or legal systems are involved. For example, a SIFI with a large number of 

legal entities—particularly foreign ones operating in different countries 

under different regulatory regimes—may be more difficult to resolve than 

a SIFI with fewer legal entities in fewer countries. We developed three 

indicators of this type of complexity—the number of a bank SIFI’s legal 

entities, the number of a bank SIFI’s foreign legal entities, and the 

number of countries in which a bank SIFI’s foreign legal entities are 

located.

A key limitation of our indicators is that they may not capture all relevant 

aspects of the complexity of a SIFI, such as complexity that could result 

from being a subsidiary of a foreign company.

We observed the following changes in our complexity indicators:

· Median numbers of legal entities for bank SIFIs decreased by 25, 

(about 19 percent). Median numbers of legal entities for large bank 

SIFIs decreased by 534, (about 19 percent), and median numbers of 

legal entities for other bank SIFIs decreased by 24, (about 22 

percent).

· Median numbers of foreign legal entities for bank SIFIs did not 

change. However, median numbers of foreign legal entities for large 

bank SIFIs increased by 143, (about 21 percent), and median 

numbers of foreign legal entities for other bank SIFIs decreased by 2, 

(about 33 percent).

· Median numbers of countries in which foreign legal entities are 

located for bank SIFIs did not change. Median numbers of countries in 

which foreign legal entities are located for large bank SIFIs remained 

about the same and median numbers of countries in which foreign 

legal entities are located for other bank SIFIs decreased by 1, (about 

25 percent).

Page 94 GAO-16-169 Dodd-Frank Regulations
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Table 12: Indicators of Complexity for U.S. Bank Systemically Important Financial Institutions (bank SIFIs) , from Second 

Page 95 GAO-16-169 Dodd-Frank Regulations

Quarter 2010 to Second Quarter 2015

Year

Large bank 

SIFIs

Other bank 

SIFIs All bank SIFIs

Median numbers of legal entities 2010 Q2 2753 108 130

2011 Q2 2268 122 167

2012 Q2 2059 97 150

2013 Q2 2605 94 124

2014 Q2 2454 93 99

2015 Q2 2219 84 105

Median numbers of foreign legal 

entities

2010 Q2 663 6 9

2011 Q2 590 8 12

2012 Q2 652 5 12

2013 Q2 858 5 9

2014 Q2 832 5 9

2015 Q2 806 4 9

Median numbers of countries in 

which foreign legal entities are 

located

2010 Q2 50 4 5

2011 Q2 51 4 6

2012 Q2 52 4 6

2013 Q2 53 4 5

2014 Q2 52 4 5

2015 Q2 52 3 5

Source: GAO analysis of data from the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Chicago. | GAO-16-169

Notes: We used data on top-tier U.S. bank holding companies with total consolidated assets of $1 

billion or more that filed Form FR Y-9C for one or more quarters during the period from the first 

quarter of 2006 to the second quarter of 2015, including any U.S.-based bank holding company 

subsidiaries of foreign banking organizations that on their own have total consolidated assets of $1 

billion or more and that filed Form FR Y-9C. We chose the threshold of $1 billion in assets to match 

the threshold for reporting Form FR Y-9C starting in the first quarter of 2015. We defined bankSIFIs

as bank holding companies with total assets of $50 billion or more, large bank SIFIs as bank holding 

companies with total assets of $500 billion or more, other bank SIFIs as bank holding companies with 

total assets of at least $50 billion but less than $500 billion, and non-SIFI bank holding companies as 

bank holding companies with less than $50 billion in total assets.

Leverage generally captures the relationship between an institution’s 

exposure to risk and capital that can be used to absorb losses from that 

exposure (resilience). Institutions with more capital to absorb losses are 

less likely to fail, all else being equal. We track two indicators of 

leverage—a bank SIFI’s tangible common equity as a percentage of total 

assets and a bank SIFI’s total bank holding company equity as a 

percentage of total assets. We measure tangible common equity as bank 

holding company equity capital minus preferred stock, goodwill, and other 

intangible assets, plus mortgage servicing rights.

Leverage
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

A limitation of both indicators is that they may not fully reflect an 

institution’s exposure to risk because total assets do not reflect an 

institution’s risk exposure from off-balance-sheet activities and generally 

treat all assets as equally risky.

We observed the following changes in our leverage indicators between 

the third quarter of 2010 and the second quarter of 2015:

· Median tangible common equity as a percentage of assets for bank 

SIFIs has increased by about 29 percent. Median tangible common 

equity as a percentage of assets for large bank SIFIs has increased 

by about 21 percent and median tangible common equity as a 

percentage of assets for other bank SIFIs has increased by about 26 

percent.

· Median total equity as a percentage of assets for bank SIFIs has 

increased by about 13 percent. Median total equity as a percentage of 

assets for large bank SIFIs has increased by about 29 percent and 

median total equity as a percentage of assets for other bank SIFIs has 

increased by about 9 percent.

Table 13: Indicators of Leverage for U.S. Bank Holding Companies, from Third Quarter 2010 to Second Quarter 2015

Page 96 GAO-16-169 Dodd-Frank Regulations

Large 

bank 

SIFIs

Other 

bank 

SIFIs

All bank 

SIFIs

Non-SIFI 

bank holding 

companies

All bank 

holding 

companies

Median tangible common 

equity as a percentage of 

total assets

2010 Q3 6.26 6.83 6.49 7.24 7.18

2011 Q2 5.67 7.24 6.99 7.88 7.77

2012 Q2 6.60 7.98 7.62 8.32 8.25

2013 Q2 6.85 8.19 8.06 8.35 8.34

2014 Q2 7.35 8.83 8.44 8.70 8.69

2015 Q2 7.58 8.60 8.37 8.67 8.66

Median total equity as a 

percentage of total assets

2010 Q3 8.21 11.55 10.64 9.29 9.41

2011 Q2 8.14 11.13 10.88 9.58 9.72

2012 Q2 8.40 11.76 11.14 9.85 10.04

2013 Q2 9.49 12.12 11.61 9.87 9.98

2014 Q2 10.21 12.16 11.43 10.28 10.34

2015 Q2 10.60 12.57 12.00 10.33 10.42

Source: GAO analysis of data from the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Chicago. | GAO-16-169

Notes: Bank-SIFIs is used for Bank Systemically Important Financial Institutions. We used data on 

top-tier U.S. bank holding companies with total consolidated assets of $1 billion or more that filed 

Form FR Y-9C for one or more quarters during the period from the first quarter of 2006 to the second 

quarter of 2015, including any U.S.-based bank holding company subsidiaries of foreign banking 

organizations that on their own have total consolidated assets of $1 billion or more and that filed Form 

FR Y-9C. We chose the threshold of $1 billion in assets to match the threshold for reporting Form FR 
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

Y-9C starting in the first quarter of 2015. We defined bank SIFIs as bank holding companies with total 

assets of $50 billion or more, large bank SIFIs as bank holding companies with total assets of $500 

billion or more, other bank SIFIs as bank holding companies with total assets of at least $50 billion 

but less than $500 billion, and non-SIFI bank holding companies as bank holding companies with less 

than $50 billion in total assets.

Liquidity represents the ability to fund assets and meet obligations as they 

become due, and liquidity risk is the risk of not being able to obtain funds 

at a reasonable price within a reasonable time period to meet obligations 

as they become due. Institutions with more liquidity (and less liquidity 

risk), are less likely to fail, all else being equal (resilience). We developed 

two indicators of liquidity—short-term liabilities as a percentage of total 

liabilities and liquid assets as a percentage of short-term liabilities. Shortterm liabilities reflect an institution’s potential need for liquidity in the 

short-term. We measure short-term liabilities as the sum of federal funds 

purchased and repurchase agreements, trading liabilities (less derivatives 

with negative fair value), other borrowed funds, deposits held in foreign 

offices, and jumbo time deposits (deposits of $100,000 or more) held in 

domestic offices. Liquid assets are assets that can be sold easily without 

affecting their price and, thus, can be converted easily to cash to cover 

debts that come due. Accordingly, liquid assets as a percentage of an 

institution’s short-term liabilities are a measure of an institution’s capacity 

to meet potential upcoming obligations. We measure liquid assets as the 

sum of cash and balances due from depository institutions, securities 

(less pledged securities), federal funds sold and reverse repurchases, 

and trading assets.

A limitation of both indicators is that they do not include off balance sheet 

liabilities, such as callable derivatives or other potential derivativesrelated obligations. The second indicator also does not include offbalance-sheet liquid assets, such as short-term income from derivative 

contracts. Because these limitations affect both the numerator and the 

denominator of our indicators, we cannot determine whether the 

exclusion of off-balance-sheet items results in an under or an 

overstatement of an institution’s liquidity need and access.

We observed the following changes in our liquidity indicators between the 

third quarter of 2010 and the second quarter of 2015:

· Median short-term liabilities as a percentage of total liabilities for bank 

SIFIs have decreased by about 15 percent. Median short-term 

liabilities as a percentage of total liabilities for large bank SIFIs have 

decreased by about 20 percent, and median short-term liabilities as a 

Page 97 GAO-16-169 Dodd-Frank Regulations

Liquidity
Appendix V: Trends in GAO Indicators for 

Bank Systemically Important Financial 

Institutions

percentage of total liabilities for other bank SIFIs have decreased by 

about 31 percent.

· Median liquid assets as a percentage of short-term liabilities for bank 

SIFIs have increased by about 70 percent. Median liquid assets as a 

percentage of short-term liabilities for large bank SIFIs have increased 

by about 51 percent, and median liquid assets as a percentage of 

short-term liabilities for other bank SIFIs have increased by about 60 

percent.

Table 14: Indicators of Liquidity for U.S. Bank Holding Companies, from Third Quarter 2010 through Second Quarter 2015

Page 98 GAO-16-169 Dodd-Frank Regulations

Large 

bank 

SIFIs

Other 

bank 

SIFIs

All bank 

SIFIs

Non-SIFI 

bank holding 

companies

All bank 

holding 

companies

Median Short-term 

Liabilities as a Percentage 

of Total Liabilities

2010 Q3 55.10 25.55 28.90 24.47 24.70

2011 Q2 52.04 23.14 26.27 22.27 22.59

2012 Q2 46.41 22.66 25.63 19.96 20.03

2013 Q2 52.00 20.82 23.61 18.99 19.09

2014 Q2 47.25 20.48 24.12 18.17 18.34

2015 Q2 43.86 17.57 24.49 18.12 18.21

Median liquid assets as a 

percentage of short-term 

liabilities

2010 Q3 100.75 78.90 79.26 67.43 69.17

2011 Q2 109.51 93.23 98.10 81.46 84.46

2012 Q2 124.22 102.58 106.89 99.46 102.61

2013 Q2 136.50 104.89 110.16 101.27 102.42

2014 Q2 150.67 111.43 112.52 88.90 92.18

2015 Q2 152.05 126.15 134.94 82.70 85.06

Source: GAO analysis of data from the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Chicago. | GAO-16-169

Notes: Bank-SIFIs is used for Bank Systemically Important Financial Institutions. We used data on 

top-tier U.S. bank holding companies with total consolidated assets of $1 billion or more that filed 

Form FR Y-9C for one or more quarters during the period from the first quarter of 2006 to the second 

quarter of 2015, including any U.S.-based bank holding company subsidiaries of foreign banking 

organizations that on their own have total consolidated assets of $1 billion or more and that filed Form 

FR Y-9C. We chose the threshold of $1 billion in assets to match the threshold for reporting Form FR 

Y-9C starting in the first quarter of 2015. We defined bank SIFIs as bank holding companies with total 

assets of $50 billion or more, large bank SIFIs as bank holding companies with total assets of $500 

billion or more, other bank SIFIs as bank holding companies with total assets of at least $50 billion 

but less than $500 billion, and non-SIFI bank holding companies as bank holding companies with less 

than $50 billion in total assets.
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

We updated our econometric analysis assessing the impacts of new 

requirements in the Dodd- Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) for bank holding companies with total 

consolidated assets of $50 billion or more—bank systemically important 

financial institutions or bank SIFIs—as they relate to (1) the funding costs 

for bank SIFIs and (2) indicators of their safety and soundness.

Our multivariate econometric model uses a difference-in-difference 

design that exploits the fact that the Dodd-Frank Act subjects bank SIFIs 

to enhanced regulation by the Board of Governors of the Federal Reserve 

System (Federal Reserve) but not other holding companies, so we can 

view bank SIFIs as the treatment group and other bank holding 

companies as the control group. We compared the changes in the 

characteristics of bank SIFIs over time with changes in the characteristics 

of other bank holding companies over time. All else being equal, the 

difference in the differences is the impact of new requirements for bank 

SIFIs primarily tied to enhanced regulation and oversight under the 

Federal Reserve.

Our general econometric specification is the following:

ybq = ab + bq + gSIFIbq + X’bqF + ebq,

where b denotes the bank holding company, q denotes the quarter, ybq is 

the dependent variable, ab is a bank holding company-specific intercept, 

bq is a quarter-specific intercept, SIFIbq is an indicator variable that equals 

1 if bank holding company b is a SIFI in quarter q and 0 otherwise, Xbq is 

a list of other independent variables, and ebq is an error term. We 

estimated the parameters of the model using quarterly data on top-tier 

bank holding companies that filed Form FR Y-9C from the first quarter of 

2006 through the second quarter of 2015.

The parameter of interest is g, the coefficient on the SIFI indicator, which 

is equal to 1 for bank holding companies with consolidated assets of $50 

billion or more in the quarters starting with the treatment start date and is 

equal to zero otherwise. The Dodd-Frank Act was enacted in July 2010, 

so the treatment start date is the third quarter of 2010. Thus, the 

parameter g measures the average difference in the difference in 

dependent variable between bank SIFIs and other bank holding 

companies before and after the Dodd-Frank Act was enacted.

Page 99 GAO-16-169 Dodd-Frank Regulations

Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial Institutions

Methodology
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

We use different dependent variables (ybq) to estimate the impacts of the 

new requirements for SIFIs on the cost of credit provided by bank SIFIs 

and on various aspects of bank SIFIs’ safety and soundness, including 

capital adequacy, asset quality, earnings, and liquidity.

· Funding cost. A bank holding company’s funding cost is the cost of 

deposits or liabilities that it then uses to make loans or otherwise 

acquire assets. More specifically, a bank holding company’s funding 

cost is the interest rate it pays when it borrows funds. All else being 

equal, the greater a bank holding company’s funding cost, the greater 

the interest rate it charges when it makes loans. We measure funding 

cost as an institution’s interest expense as a percent of interestbearing liabilities.

· Capital adequacy. Capital absorbs losses, promotes public 

confidence, helps restrict excessive asset growth, and provides 

protection to creditors. We use two alternative measures of capital 

adequacy: tangible common equity as a percentage of total assets 

and total bank holding company equity as a percent of total assets.

· Asset quality. Asset quality reflects the quantity of existing and 

potential credit risk associated with the institution’s loan and 

investment portfolios and other assets, as well as off-balance sheet 

transactions. Asset quality also reflects the ability of management to 

identify and manage credit risk. We measure asset quality as 

performing assets as a percent of total assets, where performing 

assets are equal to total assets less assets 90 days or more past due 

and still accruing interest and assets in non-accrual status.

· Earnings. Earnings are the initial safeguard against the risks of 

engaging in the banking business and represent the first line of 

defense against capital depletion that can result from declining asset 

values. We measure earnings as net income as a percent of total 

assets.

· Liquidity. Liquidity represents the ability to fund assets and meet 

obligations as they become due, and liquidity risk is the risk of not 

being able to obtain funds at a reasonable price within a reasonable 

time period to meet obligations as they become due. We use two 

different variables to measure liquidity. The first variable is liquid 

assets as a percent of volatile liabilities. This variable is similar in spirit 

to the liquidity coverage ratio introduced by the Basel Committee on 

Banking Supervision (Basel Committee) and measures a bank holding 

company’s capacity to meet its liquidity needs under a significantly 

severe liquidity stress scenario. We measure liquid assets as the sum 

of cash and balances due from depository institutions, securities (less 

pledged securities), federal funds sold and reverse repurchases, and 

trading assets. We measure volatile (short-term) liabilities as the sum 

Page 100 GAO-16-169 Dodd-Frank Regulations
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

of federal funds purchased and repurchase agreements, trading 

liabilities (less derivatives with negative fair value), other borrowed 

funds, deposits held in foreign offices, and jumbo time deposits 

(deposits of $100,000 or more) held in domestic offices.

The second liquidity variable is stable liabilities as a percent of total 

liabilities. This variable measures the extent to which a bank holding 

company relies on stable funding sources to finance its assets and 

activities. This variable is related in spirit to the net stable funding ratio 

introduced by the Basel Committee, which measures the amount of stable 

funding based on the liquidity characteristics of an institution’s assets and 

activities over a 1-year horizon. We measure stable funding as total 

liabilities minus volatile liabilities as described earlier.

Finally, we include a limited number of independent variables (Xbq) to 

control for factors that may differentially affect SIFIs and non-SIFIs in the 

quarters since the Dodd-Frank Act was enacted. We include these 

variables to reduce the likelihood that our estimates are reflecting 

something other than the impact of the new Dodd-Frank Act requirements 

for SIFIs.

· Securitization income. Bank holding companies with more income 

from securitization are likely to have different business models than 

those with more income from traditional banking associated with an 

originate-to-hold strategy for loans. Changes in the market for 

securitized products since enactment of the Dodd-Frank Act thus may 

have had a greater effect on bank holding companies with more 

securitization income. If bank SIFIs typically have more securitization 

income than other bank holding companies, then changes in the 

market for securitized products since enactment may have 

differentially affected the two groups. We measure securitization 

income as the sum of net servicing fees, net securitization income, 

and interest and dividend income on mortgage-backed securities 

minus associated interest expense, and express securitization as a 

percent of operating revenue. Operating revenue is the sum of 

interest income and noninterest income less interest expense and 

loan loss provisions.

· Nontraditional income. Nontraditional income generally captures 

income from capital market activities. Bank holding companies with 

more nontraditional income are likely to have different business 

models than those with more income from traditional banking 

activities. Changes in capital markets since enactment of the DoddFrank Act may have had a greater effect on bank holding companies 

with more nontraditional income. If bank SIFIs typically have more 

Page 101 GAO-16-169 Dodd-Frank Regulations
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

nontraditional income than other bank holding companies, then 

changes in capital markets since enactment may have differentially 

affected the two groups. We measure nontraditional income as the 

sum of trading revenue; investment banking, advisory, brokerage, and 

underwriting fees and commissions; venture capital revenue; 

insurance commissions and fees; and interest income from trading 

assets less associated interest expense, and we express 

nontraditional income as a percent of operating revenue.

· Foreign exposure. Changes in other countries, such as the sovereign 

debt crisis in Europe, may have a larger effect on bank holding 

companies with more foreign exposure. If bank SIFIs typically have 

more foreign exposure than other bank holding companies, then 

changes in foreign markets may have differentially affected the two 

groups. We measure foreign exposure as the sum of foreign debt 

securities (held-to-maturity and available-for-sale), foreign bank loans, 

commercial and industrial loans to non-U.S. addresses, and foreign 

government loans and we express foreign exposure as a percent of 

total assets.

· Size. We include size because bank SIFIs tend to be larger than other 

bank holding companies, and market pressures or other forces not 

otherwise accounted for may have differentially affected large and 

small bank holding companies in the time since enactment of the 

Dodd-Frank Act. We measure the size of a bank holding company as 

the natural logarithm of its total assets.

· Capital Purchase Program participation. We control for whether or not 

a bank holding company participated in the Capital Purchase Program 

component of the Troubled Asset Relief Program to differentiate any 

impact that this program may have had from the impact of the DoddFrank Act.

We also conducted several sets of robustness checks:

· We restricted our sample to the set of institutions with assets that are 

“close” to the $50 billion cutoff for enhanced prudential regulation for 

bank SIFIs. Specifically, we analyzed two restricted samples of bank 

holding companies: (1) bank holding companies with assets between 

$25 billion and $75 billion and (2) bank holding companies with assets 

between $1 billion and $100 billion.

· We examined different treatment start dates. Specifically, we allowed 

the Dodd-Frank Act’s new requirements for SIFIs to have an impact in 

the third quarter of 2009, 1 year before the passage of the act. We did 

so to allow for the possibility that institutions began to react to the 

act’s requirements in anticipation of the act being passed.

Page 102 GAO-16-169 Dodd-Frank Regulations
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

· We allowed the effect of the treatment to vary by quarter to allow for 

the possibility that the impact of the act varied over time.

We conducted our analysis using quarterly data on top-tier U.S. bank 

holding companies that filed Form FR Y-9C, including top-tier U.S.-based 

bank holding company subsidiaries of foreign banking organizations. We 

analyzed these companies for the period from the first quarter of 2006 

through the second quarter of 2015. We obtained these data from the 

Federal Reserve Bank of Chicago and the Board of Governors of the 

Federal Reserve System.

While some of the SIFI-related rulemakings have yet to be implemented, 

our estimates are suggestive of the initial effects of the Dodd-Frank Act 

on bank SIFIs and provide a baseline against which to compare future 

results. Our baseline estimates suggest that the Dodd-Frank Act has not 

been associated with a significant change in funding costs of bank SIFIs 

(see table 15). To the extent that the cost of credit provided by bank SIFIs 

is a function of their funding costs, the new requirements for SIFIs are 

likely to have had little effect on the cost of credit to date through the 

funding cost channel.

Table 15: Estimated Changes in Bank Systemically Important Financial Institution Funding Costs and Measures of Safety and 

Page 103 GAO-16-169 Dodd-Frank Regulations

Soundness Associated with the Dodd-Frank Act, From Third Quarter 2010 through Second Quarter 2015 (Percentage Points)

Capital adequacy Earnings

Funding 

cost 

Interest 

expense 

as a 

percentage 

of interestbearing 

liabilities

Tangible 

common 

equity as a 

percentage 

of total 

assets

Total bank 

holding 

company 

equity 

capital as 

a 

percentage 

of total 

assets

Asset 

quality 

Performing 

assets as a 

percentage 

of total 

assets

Earnings 

as a 

percentage 

of total 

assets

Liquid 

assets as a 

percentage 

of shortterm 

liabilities

Liquidity -

Long-term 

liabilities 

as a 

percentage 

of total 

liabilities

Panel 1. Baseline 

model

Estimated 

change

0.06 1.47*** 0.50 0.43*** 0.33*** 3.04 3.87***

787 bank 

holding 

companies

(0.06) (0.26) (0.39) (0.12) (0.12) (12.22) (1.06)

17,837 

observations

[0.93] [0.19] [0.10] [0.33] [0.24] [0.21] [0.42]

Panel 2. Sample 

restricted to bank 

Estimated 

change

0.11 0.46 -0.26 0.91* 0.72* 83.87*** 3.49*

Data

Results
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

Page 104 GAO-16-169 Dodd-Frank Regulations

Capital adequacy Earnings

Funding 

cost 

Interest 

expense 

as a 

percentage 

of interestbearing 

liabilities

Tangible 

common 

equity as a 

percentage 

of total 

assets

Total bank 

holding 

company 

equity 

capital as 

a 

percentage 

of total 

assets

Asset 

quality 

Performing 

assets as a 

percentage 

of total 

assets

Earnings 

as a 

percentage 

of total 

assets

Liquid 

assets as a 

percentage 

of shortterm 

liabilities

Liquidity -

Long-term 

liabilities 

as a 

percentage 

of total 

liabilities

holding companies 

with assets $25-75 

billion

40 bank holding 

companies

(0.20) (0.66) (0.69) (0.52) (0.38) (24.21) (1.90)

610 

observations

[0.88] [0.54] [0.33] [0.69] [0.48] [0.41] [0.73]

Panel 3. Sample 

restricted to bank 

holding companies 

with assets $1-100 

billion

Estimated 

change

-0.06 1.52*** 0.50 0.77*** 0.73*** 13.45 4.39**

766 bank 

holding 

companies

(0.07) (0.37) (0.63) (0.13) (0.22) (21.96) (2.19)

16,997 

observations)

[0.93] [0.15] [0.08] [0.33] [0.24] [0.21] [0.39]

Panel 4. Impact of 

the Dodd-Frank Act 

anticipated 

enactment by 1 year

Estimated 

change

-0.07 1.58*** 0.67 0.48*** 0.40*** 10.99 4.68***

787 bank 

holding 

companies

(0.07) (0.27) (0.42) (0.13) (0.10) (12.88) (1.11)

17,837 

observations

[0.93] [0.19] [0.10] [0.33] [0.24] [0.21] [0.42]

Source: GAO analysis of data from the Federal Reserve Bank of Chicago and the Federal Reserve Board. | GAO-16-169

Notes: We analyzed data for top-tier bank holding companies that filed Form FR Y-9C from the first 

quarter of 2006 through the second quarter of 2015, including U.S. bank holding companies and U.S.-

based bank holding company subsidiaries of foreign banking organizations. We defined bank 

systemically important financial institutions (SIFI) as bank holding companies with assets of $50 

billion or more. We estimated the effects of the new SIFI requirements on bank SIFIs by regressing 

the variables listed in the table on indicators for each bank holding company; indicators for each 

quarter; indicators for whether a bank holding company is a SIFI for quarters from the third in 2010 

through the second in 2015; and other variables controlling for size, foreign exposure, securitization 

income, other nontraditional income, and participation in the Troubled Asset Relief Program. 

Estimated changes are the coefficients on the indicators for whether a bank holding company is a 

SIFI in quarters from the third in 2010 through the second in 2015. *=estimate is statistically 

significant at the 10 percent level. **=estimate is statistically significant at the 5 percent level. 

***=estimate is statistically significant at the 1 percent level. Clustered standard errors are in 

parentheses. Within R-squareds are in square brackets.

Our estimates also suggest that the Dodd-Frank Act is associated with 

improvements in some measures of bank SIFIs’ safety and soundness. 

Bank SIFIs appear to be holding more tangible common equity as a 

percentage of assets than they otherwise would have held since DoddFrank Act enactment (see panel 1 in table 15). The quality of assets on 
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

the balance sheets of bank SIFIs seems to have improved since 

enactment. The act is also associated with improved liquidity as 

measured by the extent to which a bank holding company is using stable 

sources of funding and with higher earnings. However, capital adequacy 

as measured by total bank holding company equity and liquidity as 

measured by the capacity of a bank holding company’s liquid assets to 

cover its volatile liabilities have not clearly improved since enactment. 

Thus, the Dodd-Frank Act appears to be associated with improvements in 

some indicators of safety and soundness for bank SIFIs (relative to nonSIFI bank holding companies) but not others.

Our approach allows us to partially differentiate changes in funding costs, 

capital adequacy, asset quality, earnings, and liquidity associated with the 

Dodd-Frank Act from changes due to other factors. However, several 

factors make isolating and measuring the impact of the Dodd-Frank Act 

requirements for SIFIs challenging. The effects of the act cannot be 

differentiated from the effects of simultaneous changes in economic 

conditions, such as the pace of the recovery from the recent recession, or 

regulations, such as those stemming from Basel III, or other changes, 

such as in credit ratings that differentially may affect bank SIFIs and other 

bank holding companies. In addition, some of the new requirements for 

SIFIs may not yet be fully implemented.

Page 105 GAO-16-169 Dodd-Frank Regulations

1 Nevertheless, our estimates are 

suggestive of the initial effects of the Dodd-Frank Act on bank SIFIs and 

provide a baseline against which to compare future trends.

The results of our robustness checks are as follows:

· Our results for funding costs, capital adequacy as measured by total 

bank holding company equity as a percentage of assets, asset quality, 

earnings, and liquidity as measured by long-term liabilities as a 

percentage of total liabilities are generally robust to restricting the set 

of bank holding companies we analyze to those with assets of $25 

billion to $75 billion, but our results for capital adequacy as measured 

by tangible common equity as a percentage of assets and liquidity as 

measured by liquid assets as a percentage of short-term liabilities are 

not.

 

1See appendix IV for a summary of rulemakings related to select Dodd-Frank Act 

provisions applicable to bank SIFIs. 
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

· Our results are generally robust to restricting the set of bank holding 

companies we analyze to those with assets of $1 billion to $100 

billion.

· Our results are generally robust to starting the treatment in the third 

quarter of 2009, 1 year before the passage of the Dodd-Frank Act. 

This finding is consistent with the idea that bank holding companies 

began to change their behavior in anticipation of the act’s 

requirements, perhaps as information about the content of the act 

became available and the likelihood of its passage increased. 

However, there may be other explanations, including anticipation of 

Basel III requirements, reactions to stress tests, and market pressures 

to improve capital adequacy and liquidity.

· Our results for funding costs, capital adequacy, and liquidity are 

generally robust to allowing the treatment effect to vary by quarter 

(see table 16). However, our results for asset quality and earnings 

suggest that the Dodd-Frank Act may not be associated with 

improvements in asset quality and earnings in every quarter.

Table 16: Estimated Changes in Bank Systemically Important Financial Institution (Bank SIFI) Funding Costs and Measures of 

Page 106 GAO-16-169 Dodd-Frank Regulations

Safety and Soundness Associated with the Dodd-Frank Act, by Quarter From Third Quarter 2010 through Second Quarter 

2015 (Percentage Points)

Funding cost Capital adequacy

Asset

quality Earnings Liquidity

Estimated 

change in

Interest 

expense as a 

percentage of 

interestbearing 

liabilities

Tangible 

common 

equity as a 

percentage of 

total assets

Total bank 

holding 

company equity 

capital as a 

percentage of 

total assets

Performing 

assets as a 

percentage 

of total 

assets

Earnings as a 

percentage of 

total assets

Liquid 

assets as a 

percentage 

of short-term 

liabilities

Long-term 

liabilities 

as a 

percentage 

of total 

liabilities

2010Q3 -0.1 0.88*** 0.48* 0.55*** 0.56*** 5.04 2.32**

(0.07) (0.20) (0.27) (0.16) (0.15) (8.21) (0.98)

2010Q4 -0.05 1.27*** 0.74** 0.58*** 0.68*** 5.74 1.92

(0.07) (0.21) (0.30) (0.15) (0.15) (8.87) (1.17)

2011Q1 0.06 1.21*** 0.45 0.59*** 0.60*** -0.13 1.33

(0.07) (0.22) (0.29) (0.15) (0.14) (10.01) (1.12)

2011Q2 0.06 1.10*** 0.26 0.69*** 0.54*** 2.90 2.29*

(0.07) (0.22) (0.31) (0.14) (0.16) (10.22) (1.17)

2011Q3 0.04 1.09*** 0.24 0.70*** 0.48*** 5.70 3.74***

(0.07) (0.22) (0.33) (0.14) (0.15) (11.02) (1.20)

2011Q4 0.06 1.14*** 0.14 0.59*** 0.41** -0.18 3.96***

(0.07) (0.22) (0.34) (0.14) (0.18) (12.30) (1.36)

2012Q1 0.08 1.59*** 0.58 0.57*** 0.24* -4.95 4.47***

(0.08) (0.33) (0.45) (0.13) (0.14) (13.30) (1.29)
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

Page 107 GAO-16-169 Dodd-Frank Regulations

Funding cost Capital adequacy

Asset

quality Earnings Liquidity

Estimated 

change in

Interest 

expense as a 

percentage of 

interestbearing 

liabilities

Tangible 

common 

equity as a 

percentage of 

total assets

Total bank 

holding 

company equity 

capital as a 

percentage of 

total assets

Performing 

assets as a 

percentage 

of total 

assets

Earnings as a 

percentage of 

total assets

Liquid 

assets as a 

percentage 

of short-term 

liabilities

Long-term 

liabilities 

as a 

percentage 

of total 

liabilities

2012Q2 0.1 1.57*** 0.53 0.53*** 0.18 -5.33 4.63***

(0.08) (0.33) (0.47) (0.14) (0.14) (12.98) (1.20)

2012Q3 0.09 1.54*** 0.44 0.46*** 0.21 -2.29 4.51***

(0.08) (0.31) (0.45) (0.15) (0.14) (14.02) (1.22)

2012Q4 0.06 1.67*** 0.61 0.42*** 0.22 -12.67 4.48***

(0.07) (0.32) (0.46) (0.15) (0.14) (14.09) (1.22)

2013Q1 0.07 1.70*** 0.67 0.38** 0.31** -15.09 4.18***

(0.07) (0.33) (0.46) (0.15) (0.14) (13.71) (1.28)

2013Q2 0.09 1.82*** 0.76 0.34** 0.08 -6.76 4.84***

(0.07) (0.35) (0.47) (0.15) (0.25) (13.48) (1.31)

2013Q3 0.09 1.78*** 0.71 0.27* 0.13 -3.06 4.52***

(0.07) (0.36) (0.46) (0.14) (0.18) (14.15) (1.34)

2013Q4 0.1 1.90*** 0.71 0.26* 0.14 -4.50 4.81***

(0.07) (0.36) (0.51) (0.14) (0.16) (13.79) (1.40)

2014Q1 0.09 1.68*** 0.61 0.27* 0.35* -7.59 3.91***

(0.08) (0.29) (0.49) (0.14) (0.18) (15.05) (1.29)

2014Q2 0.09 1.63*** 0.53 0.27* 0.38** 5.27 4.38***

(0.08) (0.30) (0.50) (0.14) (0.18) (16.00) (1.36)

2014Q3 0.09 1.58*** 0.47 0.26* 0.34** 19.99 4.69***

(0.08) (0.33) (0.52) (0.14) (0.16) (19.45) (1.43)

2014Q4 0.1 1.49*** 0.36 0.24* 0.27* 23.55 4.35***

(0.08) (0.35) (0.54) (0.15) (0.14) (19.27) (1.45)

2015Q1 0.08 1.51*** 0.37 0.25* 0.16 20.47 4.54***

(0.08) (0.35) (0.55) (0.15) (0.13) (21.29) (1.55)

2015Q2 0.09 1.48*** 0.32 0.23 0.10 31.95 4.59***

(0.08) (0.35) (0.55) (0.15) (0.12) (22.10) (1.59)

Within Rsquared0.93 0.19 0.10 0.33 0.24 0.21 0.42

Number of bank 

holding 

companies

na na na na na na 787

Observations na na na na na na 17,837

Source: GAO analysis of data from the Federal Reserve Bank of Chicago and Board of Governors of the Federal Reserve System. | GAO-16-169
Appendix VI: Econometric Analyses of the 

Impact of Enhanced Regulation and Oversight 

on Systemically Important Financial 

Institutions

Notes: We analyzed data for top-tier bank holding companies that filed Form FR Y-9C from the first 

quarter of 2006 through the second quarter of 2015, including U.S. bank holding companies and U.S.-

based bank holding company subsidiaries of foreign banking organizations. We defined bank SIFIs

as bank holding companies with assets of $50 billion or more. We estimated the effects of the new 

SIFI requirements on bank SIFIs by regressing the variables listed in the table on indicators for each 

bank holding company, indicators for each quarter, indicators for whether a bank holding company is 

a SIFI in each quarter from the third in 2010 through the second in 2015, and other variables 

controlling for size, foreign exposure, securitization income, other nontraditional income, and 

participation in the Troubled Asset Relief Program. Estimated changes are the coefficients on the 

indicators for whether a bank holding company is a SIFI in quarters from the third in 2010 through the 

second in 2015. *=estimate is statistically significant at the 10 percent level. **=estimate is statistically 

significant at the 5 percent level. ***=estimate is statistically significant at the 1 percent level. 

Clustered standard errors are in parentheses.

Page 108 GAO-16-169 Dodd-Frank Regulations
Appendix VII: Dodd-Frank Act Rules 

Implementing Central Clearing, Capital, and 

Margin Swap Reforms

The following table lists select rules that implement sections of Title VII of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) related to central clearing requirements for swaps and 

security-based swaps, and margin and capital requirements for swaps 

entities, as of July 22, 2015.

Table 17: Select Dodd-Frank Act Rules Implementing Central Clearing Swap Reforms Final as of July 22, 2015 

Page 109 GAO-16-169 Dodd-Frank Regulations

Rulemaking Responsible regulator Published date Effective date 

Process for Review of Swaps for Mandatory Clearing CFTC 7/25/2011 9/26/2011

Derivatives Clearing Organization Operations, Standards, and Risk 

Management 

CFTC 11/8/2011 1/9/2012

Derivatives Clearing Organization General Provisions and Core 

Principles 

CFTC 11/8/2011 1/9/2012

Customer Clearing Documentation, Timing of Acceptance for Clearing, 

and Clearing Member Risk Management 

CFTC 4/9/2012 10/1/2012

Process for Submissions for Review of Security-Based Swaps for 

Mandatory Clearing and Notice Filing Requirements for Clearing 

Agencies 

SEC 7/13/2012 8/13/2012

End-User Exception to the Clearing Requirement for Swaps CFTC 7/19/2012 9/17/2012

Swap Transaction Compliance and Implementation Schedule: Clearing 

Requirement under Section 2(h) of CEA 

CFTC 7/30/2012 9/28/2012

Clearing Agency Standards SEC 11/2/2012 1/2/2013

Clearing Requirement Determination under Section 2(h) of CEA CFTC 12/13/2012 2/11/2013

Clearing Exemption for Swaps between Certain Affiliated Entities CFTC 4/11/2013 6/10/2013

Core Principles and Other Requirements for Swap Execution Facilities CFTC 6/4/2013 8/5/2013

Enhanced Risk Management Standards for Systemically Important 

Derivatives Clearing Organizations

CFTC 8/15/2013 10/15/2013

Clearing Exemption for Certain Swaps Entered into by Cooperatives CFTC 8/22/2013 9/23/2013

Regulatory Capital Rules: Regulatory Capital, Implementation of Basel 

III, Capital Adequacy, Transition Provisions, Prompt Corrective Action, 

Standardized Approach for Risk-weighted Assets, Market Discipline and 

Disclosure Requirements, Advanced Approaches Risk-Based Capital 

Rule, and Market Risk Capital Rule

Federal Reserve, OCC 10/11/2013 1/1/2014

Derivatives Clearing Organizations and International Standards CFTC 12/2/2013 12/31/2013

Prohibitions and Restrictions on Proprietary Trading and Certain 

Interests in, and Relationships With, Hedge Funds and Private Equity 

Funds

CFTC 1/31/2014 4/1/2014

Prohibitions and Restrictions on Proprietary Trading and Certain 

Interests in, and Relationships With, Hedge Funds and Private Equity 

Funds

FDIC, Federal Reserve, 

OCC, SEC

1/31/2014 4/1/2014

Source: GAO analysis of Dodd-Frank Act, Federal Register documents. | GAO-16-169

Note: CFTC is the Commodity Futures Trading Commission, FDIC is the Federal Deposit Insurance 

Corporation, Federal Reserve is the Board of Governors of the Federal Reserve System, OCC is the 

Office of the Comptroller of the Currency, SEC is the Securities and Exchange Commission, and CEA 

Appendix VII: Dodd-Frank Act Rules 

Implementing Central Clearing, Capital, and 

Margin Swap Reforms
Appendix VII: Dodd-Frank Act Rules 

Implementing Central Clearing, Capital, and 

Margin Swap Reforms

is the Commodity Exchange Act. As of July 22, 2015, SEC had not yet proposed rules requiring 

central clearing for any security-based swap.

Table 18: Select Dodd-Frank Act Rules Implementing Capital and Margin Swap Reforms Proposed as of July 22, 2015

Page 110 GAO-16-169 Dodd-Frank Regulations

Rulemaking Responsible regulator Rule status Published date 

Margin Requirements for Uncleared Swaps for Swap Dealers and 

Major Swap Participants 

CFTC Proposed 10/3/2014 

(originally 

proposed 

4/28/2011)

Margin and Capital Requirements for Covered Swap Entities Farm Credit Administration, 

FDIC, FHFA, Federal Reserve, 

OCC 

Proposeda9/24/2014 

(originally 

proposed 

5/11/2011)

Capital Requirements of Swap Dealers and Major Swap 

Participants 

CFTC Proposed 5/12/2011

Swap Transaction Compliance and Implementation Schedule: 

Trading Documentation and Margining Requirements under 

Section 4s of CEA 

CFTC Proposed 9/20/2011

Capital, Margin, and Segregation Requirements for Security-Based 

Swap Dealers and Major Security-Based Swap Participants and 

Capital Requirements for Broker-Dealers 

SEC Proposed 11/23/2012

Source: GAO analysis of Dodd-Frank Act, Federal Register documents. | GAO-16-169

Note: CFTC is the Commodity Futures Trading Commission, FDIC is the Federal Deposit Insurance 

Corporation, FHFA is the Federal Housing Finance Agency, Federal Reserve is the Board of 

Governors of the Federal Reserve System, OCC is the Office of the Comptroller of the Currency, 

SEC is the Securities and Exchange Commission, and CEA is the Commodity Exchange Act.

aSubsequent to our review period, the agencies issued an interim final rule exempting, pursuant to 

section 302 of the Terrorism Risk Insurance Program Reauthorization Act of 2015, Pub. L. No. 114–1, 

129 Stat. 3, non-cleared swaps and non-cleared security-based swaps from the agencies’ final rule 

implementing margin requirements. See Margin and Capital Requirements for Covered Swap 

Entities, 80 Fed. Reg. 74916 (Nov. 30, 2015).
Appendix VIII: Comments from the National 

Credit Union Administration

Page 111 GAO-16-169 Dodd-Frank Regulations

Appendix VIII: Comments from the National 

Credit Union Administration
Appendix IX: GAO Contact and 

Acknowledgments

Lawrance L. Evans, Jr. (202) 512-8678, evansl@gao.gov

In addition to the contact named above, Stefanie Jonkman (Assistant 

Director), Akiko Ohnuma (Analyst-in-Charge), Bethany Benitez, Pamela 

Davidson, Courtney LaFountain, Marc Molino, Barbara Roesmann, and 

Weifei Zheng made key contributions to this report.

Page 112 GAO-16-169 Dodd-Frank Regulations

Appendix IX: GAO Contact and 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Appendix X: Accessible Data

Page 113 GAO-16-169 Dodd-Frank Regulations

Ms. Stefanie Jonkman, 

Assistant Director Financial Markets and Community Investment 

United States Government Accountability Office 

441 G Street, NW

Washington, DC 20548 Dear 

Ms. Jonkman:

RE: Draft Report Entitled Dodd-Frank Regulations: Impacts on 

Community Banks, Credit Unions and Systemically Important Institutions 

(GA0-16-169)

Thank you for the opportunity to comment on GAO's draft report entitled 

Dodd-Frank Regulations: Impacts on Community Banks, Credit Unions 

and Systemically Important Institutions. We appreciate the importance of 

your work in this regard and offer the following comments.

The report acknowledges the difficulty of clearly identifying the impact of 

the Dodd-Frank Act regulations on community banks, credit unions and 

systemically important financial institutions and makes no 

recommendations . NCUA concurs with the report, though we would like 

to see a deeper consideration of structure of the credit union industry, 

which may help to more clearly illustrate the effects of the Dodd-Frank Act 

on the sector.

The report's parallel construction between credit union and bank 

indicators implies there may be more comparability between the two 

sectors than what really exists. Despite caveats indicating such 

comparisons might not be appropriate, readers with limited background in 

these sectors may not be able to judge how different these institutions 

are.

Appendix X: Accessible Data

Agency Comment 

Letter

Text of Appendix VIII: 

Comments from the 

National Credit Union 

Administration
Appendix X: Accessible Data

Business models of institutions of varying asset sizes can be very 

different. The appropriate indicators to use in assessing the effects of the 

Dodd-Frank Act may be different for very small institutions -where most of 

the credit unions are clustered -than they are for larger institutions. Using 

a set of indicators better-calibrated to the business models may be more 

helpful in assessing the effects of the Dodd-Frank Act.

Thank you again for the opportunity to comment.

Sincerely,

Mark A. Treichel 

Executive Director

Data Tables for Figure 1: Indicators of the Potential Impact of the Dodd-Frank Act 

Page 114 GAO-16-169 Dodd-Frank Regulations

on Banks by Size, First Quarter 2006 through Second Quarter 2015

Small Banks--Median number of full-time equivalent employees per 

$1 million in assets

First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 38.1 33.9 31.4 29.7 25.2

2006q2 39.2 33.9 31.7 29.2 25.1

2006q3 38.4 33.5 30.9 28.9 24.7

2006q4 37.3 32.7 30.8 28.5 24.5

2007q1 36.9 32.3 30.3 28.4 24.3

2007q2 36.9 32.7 30.1 28.4 24.2

2007q3 36.9 32.1 29.7 27.8 23.9

2007q4 36.2 31.4 29.2 27.7 23.3

2008q1 35.5 30.8 28.4 27.2 23.1

2008q2 34.6 30.6 28.2 27.1 22.9

2008q3 34.3 30.1 27.9 26.6 22.5

2008q4 33.6 29.3 26.9 26.1 22.1

2009q1 32.8 28.5 26.6 25.5 21.5

2009q2 32.7 28.5 26.5 25.5 21.5

2009q3 32.2 27.7 25.9 25.3 21.3

2009q4 31.3 27.3 25.7 24.6 21.2

2010q1 30.9 26.9 25.3 24.5 20.8

2010q2 30.8 26.9 25.5 24.7 21.2

Data Tables
Appendix X: Accessible Data

Page 115 GAO-16-169 Dodd-Frank Regulations

First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2010q3 30.7 27.0 25.0 24.3 21.3

2010q4 30.3 26.6 24.9 24.4 21.6

2011q1 29.7 26.3 24.7 24.3 21.5

2011q2 29.5 26.3 24.7 24.6 21.6

2011q3 29.2 26.1 24.2 24.2 21.2

2011q4 28.7 25.7 24.4 23.8 21.2

2012q1 27.8 24.8 23.8 23.4 20.8

2012q2 27.8 25.3 24.1 23.6 21.0

2012q3 27.7 25.2 24.1 23.6 20.7

2012q4 27.5 24.6 23.7 23.4 20.7

2013q1 27.0 24.6 23.5 23.4 20.8

2013q2 27.3 24.7 24.0 23.8 20.9

2013q3 27.4 24.5 23.9 23.6 20.5

2013q4 27.2 24.4 23.9 23.0 20.4

2014q1 26.6 24.0 23.4 22.9 20.0

2014q2 26.6 24.2 23.8 23.1 19.9

2014q3 26.5 24.2 23.6 22.8 19.5

2014q4 25.8 23.8 23.2 22.5 19.1

2015q1 25.7 23.7 23.0 22.3 18.8

2015q2 25.7 23.9 23.3 22.3 18.9

Small Banks--Median earnings as a percent of assets (%)

First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 1.1 1.3 1.4 1.5 1.7

2006q2 1.2 1.3 1.4 1.5 1.7

2006q3 1.1 1.3 1.4 1.5 1.6

2006q4 1.0 1.2 1.3 1.4 1.6

2007q1 1.1 1.2 1.2 1.4 1.5

2007q2 1.1 1.2 1.3 1.4 1.5

2007q3 1.1 1.2 1.3 1.3 1.4

2007q4 0.9 1.1 1.2 1.3 1.3

2008q1 1.0 1.1 1.1 1.2 1.2

2008q2 1.0 1.1 1.1 1.1 1.1

2008q3 1.0 1.0 1.0 1.0 0.9

2008q4 0.8 0.9 0.8 0.8 0.7

2009q1 0.8 0.9 0.9 0.9 0.7

2009q2 0.8 0.8 0.8 0.7 0.5
Appendix X: Accessible Data

Page 116 GAO-16-169 Dodd-Frank Regulations

First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2009q3 0.8 0.7 0.7 0.7 0.5

2009q4 0.7 0.6 0.6 0.6 0.5

2010q1 0.8 0.8 0.8 0.8 0.7

2010q2 0.8 0.9 0.8 0.9 0.8

2010q3 0.8 0.9 0.8 0.9 0.8

2010q4 0.7 0.8 0.8 0.8 0.8

2011q1 0.7 0.9 0.9 0.9 0.9

2011q2 0.8 0.9 0.9 0.9 1.0

2011q3 0.9 0.9 1.0 0.9 1.0

2011q4 0.8 0.8 0.9 0.9 1.0

2012q1 0.8 1.0 1.0 1.1 1.1

2012q2 0.8 1.0 1.0 1.1 1.2

2012q3 0.9 1.0 1.1 1.1 1.2

2012q4 0.7 0.9 1.0 1.1 1.1

2013q1 0.7 0.9 1.0 1.0 1.2

2013q2 0.8 0.9 1.0 1.1 1.2

2013q3 0.8 0.9 1.0 1.1 1.2

2013q4 0.7 0.9 1.0 1.0 1.2

2014q1 0.7 0.9 1.0 1.1 1.2

2014q2 0.8 0.9 1.1 1.1 1.2

2014q3 0.8 1.0 1.1 1.1 1.2

2014q4 0.8 0.9 1.1 1.1 1.2

2015q1 0.8 1.0 1.1 1.1 1.3

2015q2 0.8 1.0 1.1 1.2 1.3

Small Banks--Median residential mortgage loans as a percent of 

assets (%)

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 9.9 14.9 16.1 16.1 15.8

2006q2 10.3 15.1 16.4 16.2 15.7

2006q3 10.1 15.1 16.0 16.1 15.6

2006q4 10.0 14.7 15.6 16.3 15.4

2007q1 9.8 14.6 15.4 16.3 15.3

2007q2 10.0 14.6 15.3 16.6 15.5

2007q3 9.8 14.6 15.4 16.5 15.2

2007q4 9.6 14.8 15.3 16.3 15.3

2008q1 9.6 14.9 15.2 16.1 15.2
Appendix X: Accessible Data

Page 117 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2008q2 9.8 15.3 15.3 16.5 15.6

2008q3 10.6 15.5 16.0 16.8 15.9

2008q4 10.6 15.6 16.4 17.2 16.0

2009q1 11.0 15.3 16.5 17.2 16.0

2009q2 11.0 15.6 16.5 17.2 16.4

2009q3 11.3 16.0 16.6 17.1 16.1

2009q4 11.4 15.6 16.6 17.2 16.2

2010q1 11.3 15.6 16.5 17.2 16.0

2010q2 11.5 15.7 16.6 17.1 16.0

2010q3 11.4 15.5 16.7 17.1 16.1

2010q4 11.2 15.4 16.7 16.6 16.0

2011q1 11.0 15.0 16.3 16.1 15.3

2011q2 11.3 14.9 16.4 16.6 15.5

2011q3 11.1 15.3 16.3 16.1 15.6

2011q4 11.3 15.1 16.1 16.1 15.5

2012q1 12.0 15.8 16.6 16.7 16.3

2012q2 11.9 16.0 16.8 16.7 16.5

2012q3 12.2 16.0 16.6 16.8 16.5

2012q4 11.9 15.9 16.4 16.5 16.3

2013q1 12.0 15.5 16.4 16.1 16.1

2013q2 11.9 15.9 16.6 16.5 16.3

2013q3 12.4 16.0 16.6 16.6 15.9

2013q4 12.6 16.1 16.3 16.6 16.1

2014q1 12.5 16.0 16.1 16.5 16.0

2014q2 12.7 16.0 16.8 16.9 16.3

2014q3 13.0 16.1 16.8 17.2 16.3

2014q4 13.1 16.2 16.7 17.1 16.5

2015q1 13.0 16.2 16.5 16.9 16.4

2015q2 13.5 16.8 16.9 17.4 16.8
Appendix X: Accessible Data

Data Tables for Figure 2: Indicators of the Potential Impact of the Dodd-Frank Act 

Page 118 GAO-16-169 Dodd-Frank Regulations

on Credit Unions by Size, First Quarter 2006 through Second Quarter 2015

Credit Union--Median number of full-time employees per $1 million 

in assets

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 0.0 43.0 39.3 38.4 33.9

2006q2 0.0 43.5 39.9 39.2 34.4

2006q3 0.0 44.3 39.9 40.0 34.2

2006q4 0.0 45.4 40.2 40.1 34.2

2007q1 0.0 45.0 39.4 38.7 33.4

2007q2 0.0 44.0 39.2 38.9 33.5

2007q3 0.0 45.0 39.8 39.1 34.0

2007q4 0.0 46.0 39.9 39.2 34.0

2008q1 0.0 44.2 38.3 37.9 32.6

2008q2 0.0 43.4 37.6 37.0 32.6

2008q3 0.0 43.7 37.5 37.3 32.9

2008q4 0.0 44.3 37.5 37.2 32.6

2009q1 0.0 42.5 35.7 35.2 30.6

2009q2 0.0 41.0 34.6 34.4 30.0

2009q3 0.0 40.9 34.3 34.2 29.8

2009q4 0.0 40.5 34.4 33.7 29.5

2010q1 0.0 39.1 33.3 32.9 28.9

2010q2 0.0 38.9 32.9 32.5 28.8

2010q3 0.0 38.4 32.6 32.0 28.7

2010q4 0.0 38.3 32.8 32.2 28.5

2011q1 0.0 37.2 31.7 31.3 27.7

2011q2 0.0 36.4 31.5 31.0 27.6

2011q3 0.0 36.6 31.1 30.9 27.5

2011q4 0.0 36.7 31.1 30.5 27.3

2012q1 0.0 34.9 29.6 29.5 26.3

2012q2 0.0 34.4 29.5 29.5 26.5

2012q3 0.0 34.3 29.6 29.5 26.5

2012q4 0.0 34.3 29.6 29.6 26.4

2013q1 0.0 33.0 28.0 28.8 25.8

2013q2 0.0 32.7 28.2 28.8 26.0

2013q3 0.0 32.9 28.3 28.9 26.2

2013q4 0.0 33.1 28.6 28.7 26.1
Appendix X: Accessible Data

Page 119 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2014q1 0.0 31.9 27.9 27.8 25.5

2014q2 0.0 32.1 27.7 28.0 25.6

2014q3 0.0 31.8 27.9 28.5 25.6

2014q4 0.0 31.9 27.9 28.6 25.3

2015q1 0.0 30.9 27.0 27.7 24.8

2015q2 0.0 31.1 27.1 28.0 25.0

Credit Union--Median number of part-time employees per $1 million 

in assets

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 86.1 17.3 7.3 4.5 3.4

2006q2 88.7 17.4 7.4 4.5 3.4

2006q3 87.3 16.9 7.4 4.5 3.3

2006q4 90.0 16.9 7.5 4.4 3.4

2007q1 88.3 16.6 7.2 4.3 3.3

2007q2 85.0 16.5 7.5 4.5 3.4

2007q3 86.6 16.6 6.9 4.4 3.4

2007q4 88.1 16.9 7.1 4.6 3.4

2008q1 85.6 16.3 6.5 4.3 3.2

2008q2 82.4 15.8 6.3 4.1 3.2

2008q3 83.2 15.5 6.5 4.1 3.2

2008q4 85.2 15.0 6.0 4.0 3.2

2009q1 78.2 14.4 5.8 3.9 2.9

2009q2 71.8 13.9 5.7 3.9 2.8

2009q3 71.7 13.5 5.5 3.7 2.7

2009q4 69.2 12.5 5.4 3.6 2.7

2010q1 65.6 12.3 5.2 3.6 2.6

2010q2 64.4 11.9 5.3 3.5 2.6

2010q3 62.1 12.2 5.2 3.6 2.5

2010q4 62.5 11.8 5.1 3.5 2.5

2011q1 59.9 11.4 5.1 3.3 2.5

2011q2 61.1 11.7 5.2 3.4 2.6

2011q3 56.6 11.0 5.0 3.4 2.5

2011q4 56.3 10.8 5.0 3.2 2.4

2012q1 55.9 9.9 4.8 3.2 2.2

2012q2 52.5 10.0 4.9 3.2 2.3

2012q3 52.3 9.8 4.7 3.1 2.3
Appendix X: Accessible Data

Page 120 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2012q4 52.3 9.6 4.7 2.9 2.4

2013q1 52.0 9.2 4.7 2.9 2.3

2013q2 50.4 9.2 4.7 2.9 2.3

2013q3 49.4 9.3 4.7 2.9 2.3

2013q4 50.0 9.2 4.6 2.8 2.3

2014q1 46.5 8.7 4.3 2.7 2.1

2014q2 44.5 8.5 4.6 2.8 2.2

2014q3 44.7 8.3 4.3 2.7 2.1

2014q4 45.0 8.2 4.3 2.6 2.1

2015q1 42.9 8.2 4.1 2.5 2.0

2015q2 42.3 8.1 4.0 2.5 2.0

Credit Union--Median noninterest expense as a percent of assets (%)

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 3.7 3.7 3.8 3.9 3.7

2006q2 3.6 3.8 3.8 4.0 3.7

2006q3 3.7 3.8 3.9 4.0 3.7

2006q4 3.8 4.0 4.0 4.1 3.7

2007q1 3.9 4.0 4.0 4.1 3.7

2007q2 3.8 3.9 4.0 4.1 3.7

2007q3 3.8 4.0 4.0 4.1 3.8

2007q4 3.9 4.2 4.1 4.1 3.8

2008q1 3.9 4.1 4.0 4.0 3.7

2008q2 3.8 4.0 3.9 4.0 3.7

2008q3 3.8 4.0 3.9 4.1 3.8

2008q4 4.0 4.1 4.1 4.2 3.9

2009q1 4.0 4.0 3.9 4.0 3.6

2009q2 3.9 4.0 3.8 3.9 3.6

2009q3 3.8 4.0 3.8 3.9 3.6

2009q4 3.9 4.0 3.8 3.9 3.5

2010q1 3.7 3.8 3.7 3.8 3.5

2010q2 3.7 3.8 3.6 3.7 3.4

2010q3 3.7 3.8 3.8 3.8 3.5

2010q4 3.9 4.1 3.9 3.9 3.7

2011q1 3.6 3.8 3.7 3.8 3.5

2011q2 3.6 3.7 3.6 3.8 3.5

2011q3 3.9 3.9 3.8 3.9 3.7
Appendix X: Accessible Data

Page 121 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2011q4 3.9 3.9 3.8 3.8 3.6

2012q1 3.6 3.6 3.5 3.6 3.4

2012q2 3.6 3.6 3.5 3.6 3.4

2012q3 3.6 3.6 3.6 3.6 3.5

2012q4 3.7 3.7 3.6 3.7 3.5

2013q1 3.5 3.5 3.5 3.5 3.4

2013q2 3.5 3.5 3.5 3.5 3.4

2013q3 3.6 3.6 3.5 3.6 3.5

2013q4 3.6 3.6 3.6 3.6 3.5

2014q1 3.5 3.5 3.5 3.5 3.4

2014q2 3.4 3.4 3.5 3.5 3.4

2014q3 3.5 3.5 3.5 3.6 3.4

2014q4 3.5 3.5 3.5 3.6 3.4

2015q1 3.4 3.3 3.4 3.5 3.4

2015q2 3.4 3.3 3.4 3.5 3.4

Credit Union--Median earnings as a percent of assets (%)

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 0.7 0.6 0.6 0.6 0.7

2006q2 0.6 0.6 0.7 0.7 0.8

2006q3 0.7 0.7 0.7 0.7 0.8

2006q4 0.5 0.6 0.7 0.7 0.8

2007q1 0.6 0.6 0.6 0.6 0.6

2007q2 0.6 0.6 0.7 0.7 0.7

2007q3 0.7 0.6 0.7 0.7 0.7

2007q4 0.5 0.6 0.7 0.7 0.7

2008q1 0.5 0.4 0.5 0.5 0.5

2008q2 0.3 0.4 0.4 0.5 0.5

2008q3 0.3 0.4 0.5 0.5 0.5

2008q4 0.1 0.3 0.3 0.3 0.2

2009q1 -1.8 -2.2 -2.3 -2.0 -1.5

2009q2 -0.1 0.0 0.1 0.2 0.3

2009q3 0.0 0.0 0.1 0.2 0.3

2009q4 -0.2 -0.2 0.0 0.0 0.2

2010q1 0.0 0.1 0.2 0.2 0.4

2010q2 -0.2 -0.1 0.1 0.1 0.4

2010q3 -0.2 -0.1 0.0 0.1 0.4
Appendix X: Accessible Data

Page 122 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2010q4 -0.2 0.0 0.1 0.2 0.4

2011q1 0.1 0.2 0.3 0.4 0.6

2011q2 0.0 0.2 0.3 0.4 0.6

2011q3 -0.1 0.0 0.2 0.3 0.5

2011q4 -0.1 0.1 0.2 0.3 0.6

2012q1 0.1 0.2 0.3 0.4 0.7

2012q2 0.1 0.2 0.3 0.4 0.7

2012q3 0.0 0.2 0.3 0.4 0.7

2012q4 0.0 0.1 0.2 0.4 0.7

2013q1 0.0 0.1 0.2 0.3 0.6

2013q2 0.0 0.1 0.2 0.4 0.6

2013q3 0.0 0.1 0.2 0.3 0.6

2013q4 0.0 0.1 0.2 0.4 0.6

2014q1 0.1 0.1 0.2 0.3 0.6

2014q2 0.1 0.1 0.2 0.4 0.6

2014q3 0.1 0.2 0.3 0.4 0.7

2014q4 0.1 0.1 0.3 0.4 0.6

2015q1 0.1 0.2 0.2 0.3 0.6

2015q2 0.1 0.2 0.3 0.4 0.6

Median residential mortgage loans as a percent of assets (%)

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2006q1 0.0 0.2 11.7 20.7 29.3

2006q2 0.0 0.2 12.2 21.4 30.6

2006q3 0.0 0.5 12.6 22.3 31.4

2006q4 0.0 0.5 13.0 22.6 31.6

2007q1 0.0 0.5 13.0 22.0 30.8

2007q2 0.0 0.4 13.5 22.0 31.5

2007q3 0.0 0.5 13.5 23.0 32.4

2007q4 0.0 0.6 13.8 23.2 32.7

2008q1 0.0 0.7 13.3 22.3 32.0

2008q2 0.0 0.8 13.5 22.6 32.8

2008q3 0.0 1.1 14.1 23.6 34.2

2008q4 0.0 1.4 14.8 23.7 34.5

2009q1 0.0 1.4 14.3 22.7 32.6

2009q2 0.0 1.4 14.5 22.5 32.3

2009q3 0.0 1.6 14.7 23.1 32.6
Appendix X: Accessible Data

Page 123 GAO-16-169 Dodd-Frank Regulations

Quarter First quintile Second quintile Third quintile Fourth quintile Fifth quintile

2009q4 0.0 1.8 14.9 22.9 32.5

2010q1 0.0 1.7 14.7 22.5 31.9

2010q2 0.0 1.9 14.7 22.6 32.0

2010q3 0.0 1.9 14.8 22.9 32.1

2010q4 0.0 2.2 15.0 22.6 31.5

2011q1 0.0 2.1 14.3 22.0 30.3

2011q2 0.0 2.1 14.5 21.9 30.5

2011q3 0.0 2.4 14.8 21.7 30.4

2011q4 0.0 2.5 14.7 21.6 30.2

2012q1 0.0 2.1 14.3 20.8 28.9

2012q2 0.0 2.3 14.3 20.6 29.0

2012q3 0.0 2.4 14.5 21.0 29.0

2012q4 0.0 2.4 14.3 20.9 29.3

2013q1 0.0 2.3 13.8 20.1 28.3

2013q2 0.0 2.2 13.9 20.3 28.5

2013q3 0.0 2.4 14.2 20.9 29.2

2013q4 0.0 2.3 14.2 21.2 29.4

2014q1 0.0 2.4 13.8 20.5 28.5

2014q2 0.0 2.5 14.0 20.8 28.9

2014q3 0.0 2.9 14.5 21.2 29.2

2014q4 0.0 3.0 14.7 21.1 29.4

2015q1 0.0 3.2 14.0 20.5 28.6

2015q2 0.0 3.1 14.1 20.6 29.5

Data Tables for Figure 3: Indicators for Designated Nonbanks and Large Publicly 

Traded Banks and Insurance Companies, Second Quarter 2012 through Second 

Quarter 2015

Total Assets for Designated Nonbanks and Large Publicly Traded 

Banks and Insurance Companies, Second Quarter 2012 through 

Second Quarter 2015 (Millions of Second Quarter 2015 Dollars ).

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2012Q2 862378 580413 583988 676643 113320 186291

2012Q3 879255 572179 583481 697867 114198 179928

2012Q4 866181 567909 558301 734153 117293 179536

2013Q1 868012 566048 546081 746746 115581 182161
Appendix X: Accessible Data

Page 124 GAO-16-169 Dodd-Frank Regulations

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2013Q2 838872 552731 535932 725693 110637 182181

2013Q3 841874 553385 532882 740031 110662 180538

2013Q4 901985 551534 526572 745576 110082 167453

2014Q1 904379 555387 518168 758030 111425 168023

2014Q2 919827 534165 514438 772853 111286 168900

2014Q3 913710 530139 509750 768421 108916 165357

2014Q4 907118 518313 502867 770717 111948 173234

2015Q1 924401 523311 478849 782515 108606 160972

2015Q2 898409 509987 463320 762731 107117 163627

Gross Notional Amounts of Credit Default Swaps Outstanding for 

which Designated Nonbanks and Large Publicly Traded Banks and 

Insurance Companies are the Reference Entities, Second Quarter 

2012 through Second Quarter 2015 (Millions of Second Quarter 2015 

Dollars ).

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2012Q2 33454 46087 89964 11136 12280 68294

2012Q3 31848 43365 84204 11008 11848 62393

2012Q4 30469 38848 79793 10940 10759 55709

2013Q1 29092 37217 75683 9856 10521 51451

2013Q2 26932 33621 68667 9537 10035 49618

2013Q3 25549 30453 63542 8997 9304 47257

2013Q4 23943 25207 55031 8035 7277 41880

2014Q1 25045 22495 56350 7914 6879 39686

2014Q2 25721 21999 54535 8125 6467 38562

2014Q3 24060 19829 49051 8732 6111 35030

2014Q4 23294 19034 43224 8605 5927 34008

2015Q1 21645 18091 41117 8500 5952 32271

2015Q2 22144 17100 38976 8370 5602 29546

Total Debt Outstanding Excluding Deposits for Designated 

Nonbanks and Large Publicly Traded Banks and Insurance 

Companies, 2012Q2-2015Q2 (Millions of Second Quarter 2015 

Dollars).

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2012Q2 27556 77227 392978 37271 3440 25485

2012Q3 28165 76621 389776 36250 3714 21059

2012Q4 27483 50204 363165 34192 3701 21050
Appendix X: Accessible Data

Page 125 GAO-16-169 Dodd-Frank Regulations

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2013Q1 27030 46682 346665 35495 3687 23439

2013Q2 26808 43827 336333 34154 3394 22587

2013Q3 26343 43218 332904 34711 3377 24478

2013Q4 26711 42479 323690 34763 3362 23985

2014Q1 24649 40106 315176 35460 3350 24847

2014Q2 24504 38781 307755 36423 3332 24735

2014Q3 24012 36426 299307 36267 3318 25102

2014Q4 23901 31382 288228 33252 3534 25333

2015Q1 25329 32159 274620 30635 3317 24181

2015Q2 24227 30360 250590 31748 3374 24834

Total Equity as a Percentage of Total Assets for Designated Nonbanks and Large Publicly Traded Banks and Insurance 

Companies, 2012Q2-2015Q2 (Percentage ).

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2012Q2 10.4 21.1 14.4 9.4 13.8 11.0

2012Q3 10.6 20.8 14.6 9.3 14.3 11.2

2012Q4 10.8 20.2 15.3 8.6 14.3 11.2

2013Q1 11.0 20.6 16.0 8.9 13.9 11.5

2013Q2 10.6 20.7 16.3 8.1 14.1 11.5

2013Q3 10.8 21.0 16.3 7.8 14.6 11.4

2013Q4 11.1 21.5 16.1 8.0 14.6 11.2

2014Q1 11.6 22.0 16.7 8.5 14.7 11.4

2014Q2 12.0 23.9 16.9 8.9 17.2 11.3

2014Q3 12.1 24.3 17.6 9.0 16.9 11.3

2014Q4 12.4 24.6 18.1 9.0 16.4 11.3

2015Q1 12.5 24.7 15.5 9.6 16.5 11.3

2015Q2 12.1 24.5 15.1 9.1 15.7 11.2

Short Term Debt Less Deposits as a Percentage of Total Assets 

Less Separate Account Assets for Designated Nonbanks and Large 

Publicly Traded Banks and Insurance Companies, 2012Q2-2015Q2 

(Percentage ).

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2012Q2 0.71 0.95 21.44 2.76 0.13 3.45

2012Q3 0.71 0.17 20.23 3.31 0.02 2.62

2012Q4 0.84 0.65 17.79 2.25 0.05 2.30

2013Q1 0.73 0.55 15.61 2.20 0.02 2.47

2013Q2 0.75 0.32 14.73 2.51 0.04 2.95
Appendix X: Accessible Data

Page 126 GAO-16-169 Dodd-Frank Regulations

Date MET US Equity AIG US Equity GELK US Equity PRU US Equity Insurance (median) Banking (median)

2013Q3 0.76 0.16 15.33 2.75 0.00 2.79

2013Q4 1.02 0.71 14.96 2.71 0.10 3.41

2014Q1 0.75 0.34 14.71 3.29 0.00 2.29

2014Q2 0.73 1.09 14.18 3.22 0.09 2.37

2014Q3 0.73 0.95 13.55 3.52 0.10 2.91

2014Q4 0.94 0.46 13.75 3.53 0.00 2.91

2015Q1 0.72 0.72 13.89 2.79 0.03 1.92

2015Q2 0.74 1.22 13.84 3.05 0.00 2.74

Figure 4: Fair Value of Collateral as a Percentage of Net Current Credit Exposure for Over-the-Counter Derivatives Contracts 

for Counterparty Type and for All Counterparty Types Combined, from Second Quarter 2009 through Second Quarter 2015 

(Percentage)

All Counterparties 

Combined

Banks and 

Securities 

Firms

Monoline 

Financial 

Guarantors

Hedge 

Funds

Sovereign 

Governments

Corporations and All 

Other Counterparties

2009q2 62.2 85.3 1.2 211.3 27.5 31.3

2009q3 62.9 87.2 1.2 243.9 26.0 29.0

2009q4 68.0 92.4 1.2 282.4 24.9 32.9

2010q1 67.6 91.4 1.0 311.8 26.2 31.9

2010q2 68.8 92.1 1.6 299.3 30.8 31.6

2010q3 71.3 92.6 1.7 272.9 11.2 38.3

2010q4 70.9 88.0 1.7 342.5 15.6 40.3

2011q1 72.2 87.2 3.2 363.3 14.6 42.3

2011q2 73.6 90.9 3.2 380.6 20.1 40.7

2011q3 67.1 83.9 3.9 209.9 17.5 40.3

2011q4 73.0 89.7 9.9 317.1 13.6 41.2

2012q1 76.1 92.4 10.9 392.5 14.6 43.4

2012q2 77.5 94.9 10.2 380.5 16.2 44.4

2012q3 77.5 91.2 12.3 391.2 14.8 48.3

2012q4 79.1 92.2 14.3 405.3 13.7 50.2

2013q1 83.0 97.3 20.7 422.2 12.8 52.2

2013q2 82.2 91.8 29.4 406.3 13.5 57.1

2013q3 85.2 95.8 50.7 413.4 14.3 58.0

2013q4 86.2 98.6 41.4 413.3 14.9 57.4

2014q1 91.9 101.0 35.5 593.3 14.1 59.1

2014q2 92.7 102.1 22.7 607.7 16.0 57.9

2014q3 93.6 100.6 25.5 604.5 14.9 62.8
Appendix X: Accessible Data

Page 127 GAO-16-169 Dodd-Frank Regulations

All Counterparties 

Combined

Banks and 

Securities 

Firms

Monoline 

Financial 

Guarantors

Hedge 

Funds

Sovereign 

Governments

Corporations and All 

Other Counterparties

2014q4 94.6 101.4 17.5 614.4 11.3 71.8

2015q1 96.3 97.8 17.1 667.9 17.0 75.5

2015q2 103.6 98.2 14.0 711.0 14.2 85.5

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