During her 35 years in banking, Jane C. Walsh, co-founder, president and CEO of Northmark Bank in North Andover, has had to deal with lots of federal banking regulations.

There’s the Home Mortgage Disclosure Act, the Unfair and Deceptive Acts and Practices, the Fair Lending Act; Bank Secrecy Act, USA PATRIOT Act; Privacy Notices and the Electronic Funds Transfers Act.

But then came the Dodd-Frank Act, all 2,137 pages of it. The law is expected to generate 20,000 pages of regulations, many of which will affect community banks like Northmark.

“Dodd-Frank and the CFPB [Consumer Finance Protection Bureau] are the icing on the cake,” Walsh says. “It’s like, ‘Are you kidding me?’”

Northmark, a small community bank, has about $317 million in assets, three branches and 42 employees.

“We spend a huge amount of money on education for our folks, going to seminars, being educated about what the draft regulations are and what dates things are going to be implemented,” Walsh explains.

The endless stream of regulations affects every aspect of the bank’s business, it seems, especially lending and consumer service.

“We’re talking about 30 pieces of information on every loan you make that needs to be gathered, input, monitored and sent to the government,” she says.

Walsh doesn’t have an issue complying with regulations aimed at protecting consumers and ensuring bank solvency. The problem, she contends, is that many of the regulations are intended to curb the abuses by others that led to the mortgage meltdown.

“There were some things that happened that shouldn’t have happened with respect to mortgage companies and large banks,” she explains.

But the regulations rarely distinguish between big banks and community banks like Northmark.

Most of nine community bank officials across the nation who were interviewed for a recent FDIC study said that the strain on their organizations came from the cumulative effects of all the regulatory requirements that have built up over time.

David Floreen, senior vice president of the Massachusetts Bankers Association, says the huge amount of regulation has impeded growth at many community banks.

“It’s not only what the regulation says,” he remarks, “it’s the questioning about what it really means and what are examiners going to do that is certainly impeding sound decision-making at the local level.”

Fighting Bank

But community banks are starting to fight back.

Walsh, for example, has taken her case directly to the FDIC, arguing that community banks should be exempted from Basel III’s regulatory capital standards, which would require all banks to maintain “loss-absorbing capital” of at least 7 percent of weighted assets. The rules also put new weightings on a variety of loans, such as commercial real estate and residential mortgages.

Many community banks have argued that if not revised, the final rules – expected to be issued later this year – will have an outsized impact on small banks.

At its annual convention last month, the Independent Community Bankers of America (ICBA) said that one of its top priorities this year is lobbying for legislation to relieve community banks from excessive regulation so that they can address their customers’ credit needs, contribute to their communities and support local economies.

ICBA wants Congress and the regulatory agencies to further develop a tiered regulatory system that recognizes the differences between community banks and banking behemoths.

That would be welcome news for Walsh, who has been active in lobbying for reform of regulations.

“The regulations continue to come, and we need to continue to comply,” she says, “but it takes away resources that could be spent more wisely.”

Her biggest concern, she says, is whether all the time and energy spent on complying with regulations benefits consumers.

For example, she says, Northmark could process mortgage loans much more quickly if not for the delays caused by new regs.

“As a bank that’s highly focused on customer service, I feel like the regulations are holding us back,” Walsh says.

“Somebody needs to take a look soon and see what really is helpful, what’s not helpful, and if there are any unnecessary regulations that are still there requiring compliance on a daily basis that they be removed,” she says.

Email: noratooher92@gmail.com