A law passed in 2010, Dodd-Frank, designed to reduce corporate and Wall Street fraud, has certainly been making headway toward its intended goals. However, an unintended side effect of the law has been increasing difficulty for small businesses to obtain loans from their community banks and credit unions.

The main reasons? First, because of Dodd-Frank, there are significantly fewer community banks and credit unions in existence. Succumbing to the weight of the regulations, they have either gone out of business completely or been gobbled up by larger regional and national financial institutions. Second, the smaller community banks and credit unions that do remain have become so focused on devoting resources to complying with Dodd-Frank requirements that they have less time and resources to focus on lending to small businesses or are reducing the numbers and types of loans that they do make.

The legislative text of Dodd-Frank totaled approximately 850 pages, and its new rulemakings have created over 20,000 pages of regulatory text. When it was passed, it involved the creation of almost 400 new rules, about 250 of which had been passed by July of this year. As a result, Dodd-Frank is estimated to have created $24 billion in compliance costs and 61 million hours in paperwork burdens.