Trump takes step to curb financial regulations
Orders target Dodd-Frank, investments rule
WASHINGTON President Donald Trump launched his long-promised attack Friday on banking rules that were rushed into law after the nation’s economic crisis, signing new orders after meeting with business and investment chiefs and pledging further action to free big banks from restrictions. Wall Street cheered him on, but Trump risks disillusioning his working-class voters.
He directed his Treasury secretary to review the devilishly complex 2010 Dodd-Frank financial oversight law, which was signed by President Barack Obama to overhaul regulations after the financial and housing crisis of the past decade. It aimed to restrain banks’ from misdeeds that many blamed for the crisis.
The new president also signed a memorandum instructing the Labor Department to delay an Obama-era rule that requires financial professionals who charge commissions to put their clients’ best interests first when giving advice on retirement investments.
While the order on Dodd-Frank, named after its Democratic sponsors, won’t have an immediate impact, Trump’s intent is clear. The law has been a disaster in restricting banks’ activities, he said this week. “We’re going to be doing a big number on DoddFrank.”
During a meeting with business leaders, including JPMorgan Chase CEO Jamie Dimon on Friday, he said, “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 ’em borrow because of the rules and regulations of DoddFrank.”
Those regulations unnecessarily cramp the U.S. economy and job creation, he declared. But many Democrats see it differently, including Sen. Elizabeth Warren, who was behind the formation of the Consumer Financial Protection Bureau, formed as part of the Dodd-Frank law.
“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 said in a statement. “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.”
The crisis touched off the worst recession since the 1930s Great Depression, wiping out $11 trillion in U.S. household wealth and leaving about 8 million Americans jobless. U.S. taxpayers funded multibillion-dollar bailouts of Wall Street mega-banks, smaller banks across the country and other financial firms.
Eight years on, the economy’s recovery has been halting, a situation that contributed to Trump’s election. Beyond being fed up with bailouts, consumers have an interest in the Consumer Financial Protection Bureau, which expanded regulators’ ability to police a wide array of financial products and services.
In his other action Friday, Trump’s presidential memorandum on financial advisers delayed implementation of the past administration’s “fiduciary rule,” aimed at blocking consultants from steering clients toward investments with higher commissions and fees that can eat away at retirement savings. The rule was to take effect in April.
The financial services industry argues that the rule would limit retirees’ investment choices by forcing asset managers to steer them to low-risk options.