Trump unveils plan to dismantle Dodd-Frank Act
“Bureaucratic red tape and Washington mandates are not the answer”
Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.
Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act.
Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.
Under a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.
Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.
“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”
“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”
The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.
The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.
“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.
“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”
In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.
“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”
One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.
Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.
According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”
The Trump Administration is “committed to regulatory reform that will produce sensible regulations that allow America to be great,” the website states.
As HousingWire previously reported, there’s already a Republican-led effort underway in Congress to repeal and replace Dodd-Frank and many of its regulations.
Earlier this year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, introduced a bill in the House that would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the CFPB, and much more.
The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.
The bill would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”
Again, it’s unknown how Trump will accomplish the dismantling of Dodd-Frank, but Christopher Whalen, the senior managing director of Kroll Bond Rating Agency, is already predicting that pursuing the Financial CHOICE Act, or some version of it could be one of Trump’s first moves as president.
“Changing the narrative regarding Dodd-Frank and related regulations is not a simple task,” Whalen wrote in a post-election note. “That said, addressing Dodd-Frank and related issues is a lot simpler than either tax reform or fixing the (Affordable Care Act.)”
Whalen says that KBRA’s “decidedly speculative bet” is that Trump will back a modified version of the Financial CHOICE Act that would be altered to make it more “palatable” to the Senate.
Despite Democratic opposition to any proposed changes to Dodd-Frank, Whalen writes that changes to Dodd-Frank could be much more easily accomplished that changes to the tax code, or repealing Obamacare.
“We note that Rep. Hensarling is very close to Vice President-elect and Indiana Governor Mike Pence from the latter’s days in Congress, and that Hensarling even travelled with the campaign,” Whalen writes. “KBRA notes that there are a number of other issues that may catch the attention of the new President next year, but for our money passage of an amended version of the CHOICE Act has the highest probability of success in 2017. Needless to say, the financial services industry would be very supportive.”
article in today’s Housing Wire Newsletter
Like this post? Subscribe to my RSS feed and get loads more!