The president’s orders may lead to a reversal of Dodd-Frank, and the end of the fiduciary rule.
In what is turning out to be a pattern, President Donald Trump chose to issue major directives on a Friday, and in this case, he signed documents intended to repeal key areas of regulation of the financial services industry.
The president hinted at what was to come later on Friday, Feb. 3, during remarks for the Strategy and Policy Forum in the morning.
“We have some of the bankers here,” Trump said. “There’s nobody better to tell me about Dodd-Frank than Jamie [Dimon, chairman of the board and CEO, JPMorganChase who was in attendance], so you’re going to tell me about it. But we expect to be cutting a lot out of Dodd-Frank, because, frankly, I have so many people, friends of mine that have nice businesses that can’t borrow money, they just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank. So we’ll be talking about that, Jamie, in terms of the banking industry.”
Although official texts of two directives were released late on Feb. 3, The New York Times, The Wall Street Journal and other media reported beforehand that the Trump administration was setting the parameters for a Dodd-Frank reversal via executive action.
In particular, the administration wants a U.S. Treasury review of Dodd-Frank that will lead to the end for rules and regulations deemed harmful for economic growth. The full text of the directive related to the Dodd Frank repeal is at: http://bit.ly/2l9i5yS.
Separately, Trump is also asking the the Department of Labor to review the pending Fiduciary Duty Rule “to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice,” according to the order. “As part of this examination, you shall prepare an updated economic and legal analysis concerning the likely impact of the Fiduciary Duty Rule.”
The order is seen as a step toward stopping the rule, slated to take effect in April, which is intended to require financial advisers to keep their clients’ retirement concerns foremost in their advice rather than self-serving investment actions. The text of the directive is at: http://bit.ly/2khpJ8n.
The Dodd-Frank review and reversal may help the chances of the Financial CHOICE Act quietly developed by Jeb Hensarling (R-TX), the House Financial Services Committee chairman about six months ago.
Not surprisingly, Hensarling and Ann Wagner (R-MO), Oversight and Investigations Subcommittee chairman are enthusiastic about President Trump’s “core principles for regulating the financial system,” and say in a statement that Trump’s words actually reflect Hensarling’s Financial CHOICE Act.
“I’m very pleased that President Trump signed this executive action, which closely mirrors provisions that are found in the Financial CHOICE Act to end Wall Street bailouts, end ‘too big to fail,’ and end top-down regulations that make it harder for our economy to grow and for hardworking Americans to achieve financial independence,” Hensarling says via the statement.
“When Dodd-Frank was passed, Americans were promised a healthier economy, an end to bailouts and better consumer protections,” Hensarling says. “Instead, we have the weakest recovery in history, a guarantee of more Wall Street bailouts, and consumer costs have gone up while their choices have gone down. Today the big banks are bigger and the small banks are fewer. Everything from mortgages to credit cards to monthly checking fees costs more because of Dodd-Frank’s red tape, if consumers can even get access to them.”
Wagner says she applauds President Trump for signing the executive order.
“President Trump’s order is consistent with our vision in Congress to end the ‘Washington-knows-best’ mentality, as we move forward with the Financial CHOICE Act to kick-start our economy and provide hardworking Americans with clear opportunities for a successful future,” Wagner says.
The president’s actions have been criticized by Democrats, including Elizabeth Warren, U.S. Senator from Massachusetts, who assailed Trump’s executive orders and the delay of the Department of Labor’s Conflict of Interest rule for financial advisers, the so-called “fiduciary rule.”
“Donald Trump talked a big game about Wall Street during his campaign — but as President, we’re finding out whose side he’s really on,” Warren says. “Today, after literally standing alongside big bank and hedge fund CEOs, he announced two new orders — one that will make it easier for investment advisors to cheat you out of your retirement savings, and another that will put two former Goldman Sachs executives in charge of gutting the rules that protect you from financial fraud and another economic meltdown.”
“The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis — and they will not forget what happened today,” Warren says.
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