Although the broad outlines of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Barack Obama signed into law in July, have been widely reported, estimating its impact on bank profitability is subject to significant uncertainties. Indeed, regulators are still finalizing and implementing the law's details. Because of Dodd-Frank's importance, however, Standard&Poor's Ratings Services has made its first projections of how bank earnings might fare in the next few years under this sweeping regulatory reform. Based on our current understanding of the law, we estimate that profitability at the largest U.S. banks will likely come under pressure because of the effects of Dodd-Frank. We don't expect most of the reform's impact on earnings, however, to be
