In Washington, D.C., the pendulum of financial regulation might be about to swing back toward deregulation, albeit slowly.
With Republicans now in control of the legislative and executive branches, the push to relax post-recession regulations on banks and public companies is gaining momentum. Despite a recent executive order that is seen to encourage a rollback on the Dodd-Frank Wall Street Reform and Consumer Protection Act, overhauling Dodd-Frank regulations will still require an act of Congress. Still, banks and public companies can get a sense of how the regulatory landscape might shift in the months and years to come regarding certain vulnerable rules.
The executive order that President Trump signed Feb. 3 doesn’t mention the Dodd-Frank Act or any other statute or financial regulation by name. Granted, it is widely understood to be directed toward the sweeping financial regulation scheme, which Trump criticized last year on the campaign trail as a “disaster.” He told Reuters in May that the law made it “very hard for bankers to loan money … (and) for people to create jobs, for people with businesses to create jobs.”
The order directs the U.S. Secretary of the Treasury to consult with the Financial Stability Oversight Council to identify any laws or regulations “that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.” The Core Principles laid out in the order include “enable(ing) American companies to be competitive with foreign firms in domestic and foreign markets” and “mak(ing) regulation efficient, effective, and appropriately tailored” while preventing taxpayer-funded bailouts.