Dodd-Frank will cost nearly $3 billion, says GAO
The Dodd-Frank Wall Street Reform Act was intended to save U.S. consumers a significant amount of money – but at what cost? With any governmental undertaking, there’s a financial burden taxpayers shoulder. According to a Government Accountability Office (GAO) report, that burden will amount to as much as $2.9 billion over five years, the price of Wall Street reform.
Financial stability is not entirely dependent on taxpayers
While it may seem as if taxpayers are being asked to pay without end, the Dodd-Frank Act reportedly will not require full taxpayer subsidization to function, writes the Wall Street Journal. Of the 11 agencies that will be responsible for putting the Dodd-Frank laws into practice, six are either fully or partially funded by revenues and assessments from companies and/or entities that the Dodd-Frank agencies oversee. Three others are covered by congressional appropriations, while the watchdog Consumer Financial Protection Bureau will receive its money from the Federal Reserve, all of which was originally obtained from assessments and other revenues, rather than from taxpayer wallets.
Financial institutions will pay the government more
Banks, credit unions, investment houses and short term loan outlets are slated to pay the U.S. government more to operate under Dodd-Frank laws. This has raised concerns within the financial community that competitiveness will be hampered by over-regulation, and House Republicans have taken up that torch, using GAO report findings to support the idea that Dodd-Frank is too much for a slowly recovering economy to bear.
Breaking down the numbers, the GOP plans to highlight such things as the $975 million cost for the 11 agencies in the first year of the Dodd-Frank Wall Street Reform Act. That’s the baseline used to project the five-year, $2.9 billion price tag. Moreover, hiring 2,600 full-time workers (including 1,225 for the Consumer Financial Protection Bureau) will produce significant cost.
Other highlights from the GAO report
From the upcoming GOP presentation to the House Financial Services Subcommittee on Oversight and Investigations, the Journal points out the following:
- A Fed estimate from earlier this year projected a cost of $77.5 million to pay 290 full-time staff dedicate to Dodd-Frank implementation. Three new offices – the Office of Financial Stability Policy and Research, Financial Market Infrastructures Risk Analytics and Financial Market Infrastructures Oversight – were created to run Dodd-Frank laws smoothly.
- The first of the three Fed sub-offices, the Financial Stability Oversight Council, will pay seven full-time staff up to $7.9 million beginning in fiscal 2012.
- The Office of Financial Research has $74.5 million earmarked for use in fiscal 2012 and will hire 135 full-time staff to perform duties under Dodd-Frank.