Four years after the introduction of the Dodd-Frank Act, changes are just beginning to take off in the banking world. Designed to hold banks and financial institutions more accountable after the recent financial crisis—the worst since the Great Depression—Dodd-Frank will eventually introduce a total of 398 new regulations that are making big changes to the way banks do business. Four years in, more than 200 of those regulations have been completed.

Adaptation Will Be Key for Banks in 2014 as Dodd-Frank Takes Off

Even large banks like J.P. Morgan Chase are not immune to the changes.
Daryl Lang /

“It creates a very confusing situation for the entire industry,” said Ronald D. Pail of Eagle Bancorp, according to the Washington Post. “Each new rule puts a whole different spin on swaps, on derivatives, on capital requirements. You have to constantly be adapting.”

The Dodd-Frank Act is the largest piece of legislation ever, in terms of the sheer number of new banking regulations it introduces.

“Staying current with all of the changes in the law right now is a time consuming endeavor,” says Andrew Olmem of Venable. “The Volcker rule is 800 pages. And it isn’t 800 pages of fluff. And that’s just one rule of several hundred required by Dodd-Frank.

The Volcker rule is designed to prevent banks from taking part in investments that are too risky. “There’s a real reluctance from the regulators to let the ‘too big to fail’ get bigger,” Lazard CEO Kenneth Jacobs said after announcing that Lazard had seen strong 4th quarter earnings. Jacobs also noted that high-level mergers and acquisitions were likely to slow down as financial institutions work to get a handle on the new regulations.

According to Jacobs, “What we’re starting to see now is a bit more optimism about [economic] recovery in the US,” which will help drive an overall uptick in activity in the coming year.

For a more detailed look at the Dodd-Frank Act and how it’s affecting financial institutions, check out this article from the Washington Post.