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It has taken seven years to put in place the regulatory strictures imposed on Wall Street after the financial crisis. They won't be removed fast or easily.
President Trump's directive Friday that set in motion a scaling back of the Dodd-Frank Act was more pageantry than policy, said lawyers and former government officials who worked on the 2010 law. While the expectation for quick action sent bank stocks higher Friday, numerous road-blocks remain before lenders get relief.
Chief among the hurdles is that Trump doesn't have any of his appointees running the agencies that oversee financial rules. Congress, too, will have to pass new legislation for many Dodd-Frank regulations to be eased. And the president's decision to put two former Goldman Sachs Group Inc. partners in charge of the effort — less than a decade after the bank's traders helped bring the economy to the edge of collapse — galvanized opposition from Democrats.
Trump's order is “more of a signal to the marketplace than real action,” said Richard Hunt, who runs the Consumer Bankers Association, a group that represents retail banks. “This is the second inning of a nine-inning regulatory re-balancing.”
Meanwhile, House Democratic Leader Nancy Pelosi vowed Monday to fight what she called President Donald Trump's “massive con” to dismantle the Dodd-Frank financial law.
Pelosi said House Democrats would take their case to the public to try to stop Trump from removing protections designed to prevent a repeat of the 2008 financial crisis.
“The president has moved to expose hardworking Americans to unfair, deceptive and predatory practices, perpetuating a massive con on those who thought he would stand up for them against the powerful interests,” Pelosi said.
Dodd-Frank, which was passed with almost no Republican support in the wake of the financial crisis, toughened capital requirements for financial firms, set up a powerful panel of regulators to watch for threats and created the Consumer Financial Protection Bureau to oversee credit cards, mortgages and other financial products.
Trump signed an executive order ordering a review of Dodd-Frank, which he has vowed to dismantle. Republicans and businesses say the law has restricted bank lending and consumer choices.
After the signing, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said the move represented “the beginning of the end of the Dodd-Frank mistake.”
Democrats have promised to defend the 2010 law, one of former President Obama's signature accomplishments.
Although some rules can be weakened by regulators appointed by Trump, key provisions cannot be eliminated without legislation. That sets up a looming political battle between the Trump administration and congressional Democrats.
“The lesson of history is that when faced with a danger like Donald Trump, opposition needs to grow. Most of all, opposition needs to be willing to fight,” Sen. Elizabeth Warren, D-Mass., an ardent supporter of Dodd-Frank, told the Progressive Congress Strategy Summit in Baltimore on Saturday.
“Giveaways to giant banks so they can cheat people and blow up our economy again?” said Warren, who came up with the idea for the consumer bureau. “We will fight back.”
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