Trump begins dismantling Obama financial regulations
- Author: Rita Burton Feb 04, 2017,
Feb 04, 2017, 0:49
With the stroke of a pen, President Trump has potentially started the unwinding of numerous hallmark financial regulations of the Obama administration.
So, what's in Dodd-Frank, and what parts might the Trump administration be looking to revise?
Trump's action to review Dodd-Frank led to a strong day for financial stocks Friday as bankers across the country largely heralded the move as a step toward decreased regulatory burden.
"(We) believe that Dodd-Frank in many respects was a piece of massive government overreach", said a senior administration official.
Some critics of the rule, including White House National Economic Council Director Gary Cohn, have said it would limit consumer choice and force advisers to only offer retirement products with the lowest fees, regardless of whether those products were the best ones for clients.
► A presidential memorandum to the secretary of Labor ordering a delay in implementing a rule requiring financial advisers to act in their clients' best interests. The directive will instruct the Treasury secretary to meet with the agencies that oversee the law to identify possible changes.
The Labor Department's retirement advice rule, set to take effect in April, is not part of the Dodd-Frank law, but has always been a thorn in the side of the financial services sector.
"We're going to be coming up with a tax bill very soon, a health care bill even sooner", he said.More news: Insurance Commissioner: Insurance Market Better Off Before Obamacare
However, it was the prospect of Dodd-Frank - one of the biggest pieces of financial regulation for decades - being scaled back that drew the most attention.
The Dodd-Frank Act has always been a thorn in the side of congressional Republicans and business leaders alike. The bureau also been working on rules that would prevent banks and other financial firms from blocking class-action lawsuits by consumers and would require payday lenders to do more underwriting.
But between now and the possible passage of legislation overhauling, Trump could make many changes without involving lawmakers by appointing new regulators and ordering them to ignore most of Dodd-Frank rules. Dodd-Frank created a new Consumer Financial Protection Bureau, which has returned almost $12 billion to wronged households since it's founding. "It is a bad rule for consumers", Cohn said.
The executive order will be a major move toward Trump's promise of reducing the regulatory burden on United States business - a stance that is well received by Republicans.
Mr. Cohn also hopes to overhaul government-sponsored mortgage finance giants Fannie-Mae and Freddie-Mac which has been placed into conservatorship, under control of the Treasury Department since the financial crisis.
The Dodd-Frank Act, or the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides a wide number of protections for Americans who were adversely impacted by the 2008 economic crisis.
The move would address another one of Trump's campaign promises: Dismantling 2010's financial reform legislation, known as Dodd Frank.