Trump signs DoddFrank rollback as push continues
WASHINGTON: US President Donald Trump signed into law the first major rollback of the postcrisis banking regulations after Congress approved the legislation this week.
The law frees small- and mediumsized banks from more stringent regulatory scrutiny and stress testing created under the 2010 Dodd-Frank Wall Street reform legislation.
Democratic leaders have denounced the reform – which was nevertheless sponsored by several Democrat senators in tight re-election races – as an invitation to the return of the reckless conduct which caused the 2008 global financial crisis and the subsequent Great Recession.
Community banks and credit unions “shouldn’t be regulated the same way as the large, complex financial institutions and that’s what happened and they were being put out of business one by one,” Trump said at the White House just before signing the law.
“As a candidate, I pledged that we would rescue these community banks from Dodd-Frank – the disaster of Dodd-Frank – and now we are keeping that commitment, and all of the people with me are keeping that commitment,” he said.
But the Federal Deposit Insur- ance Corporation this week reported the US banking sector, small community lenders as well as major financial institutions, just had the most profitable quarter ever.
This would have been the case even without December’s sweeping tax cuts, according to the FDIC, which said banking profits rose 27.5 per cent to US$56 billion in the latest quarter.
Community banks saw a 17.7 per cent increase in net income.
Under the new law, banks with up to US$250 billion in assets will be freed from Dodd-Frank’s stricter oversight, including stress tests, leaving only about a dozen major US banks subject to the law’s toughest oversight requirement.
The law also exempts smaller banks both from the so-called living will requirement and from the so-called Volcker Rule, which limits riskier “proprietary trading.” — AFP