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Accountants, Lawyers, Consultants Making Dodd-Frank Part of Their Expertise

NOVEMBER 2010

As published in the Memphis Business Journal

While a bill with 2,300 pages of financial institution regulatory jargon won't become this year's best seller, it still has to be interpreted by someone.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in July, contains 144 rules that regulators have to impose over the next 24 months. And a whole new industry of translators - consultants, lawyers, accountants and others - is sprouting around the legislation, seizing what could be new business opportunities.

While anyone can read the bill, understanding and complying with it is daunting.

"It's cumbersome," says Phillip Smith, president of Gerrish McCreary Smith PC, Attorneys. "No one, not even members of Congress who voted to approve the legislation, has actually read it."
Smith says most smaller banks don't have the time, capacity or resources to review the legislation to see what does and does not apply to them. That means accounting and consulting firms have become knowledge powerhouses for financial institutions.

"It would be inefficient for companies to build in-house expertise on Dodd-Frank," says Sam Chafetz, shareholder in the corporate governance and securities section of Baker, Donelson, Bearman, Caldwell & Berkowitz PC. "Firms like Baker Donelson build expertise upon knowledge we already have to better help them."

As financial institutions race to comply with the unforeseen, consultants have the opportunity to capitalize on knowing the ins and outs of Dodd-Frank. However, their obligation to clients is holding more weight than money.

"We're being proactive and getting information out," says Rusty Butcher, partner and director of financial institutions with CPA firm Horne LLP. "We're not doing a hard sale, just displaying our skills as knowledge leaders."

The size of the consulting bill is a concern for companies that want to receive outside help for understanding.

"It is expected that there will be 10,000 to 15,000 pages of regulation," says Smith.

Since the bill was passed, Smith has given numerous presentations across the country on its impact, the regulations and how banks can respond.

Butcher says small banks are worried that the cost of compliance will be too much for them to exist. However, nobody knows exactly what to expect.

"People are sitting on the sideline waiting for what's going to happen," Butcher says. "It requires so many studies and future legislation. As the bill develops, people are thinking it might not protect consumers as thought."

Last month, Chafetz went to Washington, D.C. to meet with Securities Exchange Commission members who are considering appropriate regulations.

"We brought them the problematic view and told them where we saw the weaknesses and ambiguity in the act," he says.

Even though the bill passed four months ago there are many regulations that have not been set. For companies being regulated, there is no way of knowing when the rules will become finalized.
"Until there are regulations, our clients won't have a clue what they have to do," says Chafetz.

Smith doesn't expect answers any time soon.

"I would not be surprised if five years or more from now we are still discussing the act and its continuing impact on financial institutions."