The 2010 financial reform law, known as the Dodd-Frank Act, has led to a 14.5 percent cut in consumer revolving credit since its enactment, says the American Action Forum.  Based on the AAF’s latest research, consumer credit access is taking a substantial hit as a result of the $30 billion in regulatory costs and 72 million hours of paperwork associated with the Dodd-Frank Act.  

The AAF studied Federal Reserve data from 2005 to 2014 to determine the Act’s impact on total revolving credit, which refers to debt that is paid for periodically and can be borrowed again (including credit card debt).  The researchers found that the Dodd-Frank Act may have had a significant negative effect on revolving consumer credit.  The researchers’ findings are not particularly surprising, however, in light of criticism that Dodd-Frank places a high burden on American banks, and especially smaller banks that may be less equipped to comply with the increased regulations and compliance costs.   

Reduced credit availability not only affects those consumers who are unable to gain access to credit, but it affects the country’s economy as a whole.  “It makes no sense that a financial regulation would restrict financial services in such a way as to hurt both the economy and the consumers and the citizens it’s intended to serve, but that’s exactly what Dodd-Frank is doing,” concluded the AAF researchers.