In an opinion piece published earlier this month, Chief Economist for the Conference of State Bank Supervisors (CSBS) Thomas Siems called upon Congress to address the “regulatory structure that continues to push the smallest institutions towards extinction.”
“For the first time, 10 years of empirical evidence now confirms what community bankers have warned all along: Compliance costs fall hardest on those least able to absorb them,” Siems said. “In banking today, compliance behaves like a fixed cost. It does not scale gracefully; it punishes smallness.”
He went on to cite CSBS data that found:
- While the smallest community banks spent between 11 percent and 15.5 percent of their payroll on compliance activities over the decade, the largest quartile of banks in the annual surveys spent only 6 percent to 10 percent.
- The pattern repeats for data-processing costs, where the smallest banks devoted between 16.5 percent and 22 percent of their budgets to compliance, compared with 10 percent to 14 percent at the largest institutions.
- Accounting and auditing expenses ran 5 percent to 17 percent higher at the smallest banks.
