President-elect Donald Trump signed two new executive orders last Friday. One of the two is intended to scale back the Dodd-Frank Act of 2010 in order to ease the regulation that is being put on Wall Street.
From the executive order, the country’s Department of the Treasury is directed to consult with the regulatory agencies regarding on what can be done to take out the ‘overreaching’ aspects of the Dodd-Frank Act, especially the ones that are affecting Wall Street. Also, the department must produce a report to Pres. Donald Trump.
The 2010 Dodd-Frank Act is a regulatory law that was established under former President Barack Obama. It specifically targeted the financial institutions that are considered as too big to fail. The new White House Press Sec., Sean Spicer, described the Act as ‘disastrous’ and ‘overreaching’ during last Friday’s briefing.
According to him, there is a need to overhaul how the White House approaches financial regulation. Director of White House’s National Economic Council and former president and COO of Goldman Sachs, Gary Cohn, said that the executive order made by Pres. Trump is just a part of a bigger plan which is to dismantle most of the current regulatory system that was put in place after the 2007-2008 financial crisis.
In an interview with Wall Street Journal, he said the Americans will now have better choices. Furthermore, the American people will be able to receive better products (with Trump’s executive order) because they are now taking out the burden that was set on banks which was to pay billions of dollars for regulatory costs every single year. He added that the banks in the country are now going to price their products more effectively and efficiently for American consumers.
Pres. Trump also signed an executive order which was meant to delay the implementation of one rule. The rule was to demand financial institutions and advisers to act in their clients’ best interests when handling their retirement accounts. This was established under the presidency of Barack Obama and it will be reviewed by the US Department of Labor to assess whether it is actually necessary or not.
The President signed both orders after meeting with the top business executives of the country including the CEO of JPMorgan Chase, James Dimon.
Just a week ago, Trump said to the media that Dodd-Frank is a total disaster and that he intends to do a huge number on it.
For all the worries and concerns on what the President would do to the existing rule, there might be a possibility that it is already too late for anyone, including Trump, to do anything in order to undercut the changes. It is because most of Wall Street firms complied with the new standard already which has created a shift in the industry that is unlikely to bend, according to the experts.
Founder of Vanguard Group, Jack Bogle, told Business Insider that it is now extremely difficult to take a step back from the rule that is obviously needed and is vital to Wall Street.