With a Stroke of the Pen, Donald Trump Will Wave Goodbye to the Dodd Frank Act

The fundamental issue is the existence of the Federal Reserve and our system of dishonest money. That is unlikely to be addressed by Trump unfortunately.

I sure wish the President had gone with John Allison formerly of BB&T and CATO at Treasury instead of with Goldman alum Mnunchin.

Dodd-Frank should be overhauled however. It is a real burden on small banks and encourages large banks to become even larger so that they achieve “too big to fail” status. Just for instance.

(From Forbes)

Presently, banks exceeding $10 billion in assets are subjected to increased oversight, and those with $50 billion in assets can be deemed a systemically important financial institution and put under exams administered by the Federal Reserve such as stress tests. A day after the election, Tom Michaud, CEO of financial sector investment bank Keefe, Bruyette & Woods told FORBES he’d like to see an increase of SiFi designations to just banks with $250 billion in assets and above.

Such relief might have a potent impact on Main Street because it would dramatically reduce overhead costs for small and mid-sized lenders, potentially giving them greater financial flexibility to make small business and consumer loans. More broadly, bank CEOs like JPMorgan’s Jamie Dimon have said regulatory relief could increase the flow of money into the broader economy.

“I do think if there’s some regulatory relief, you will see banks be more aggressive and growing, opening branches in new cities, adding to loan portfolios, seeking out clients they don’t have. So I’m hoping that we’ll see a little bit of that too, but that will wait for a little regulatory relief,” Dimon told investors on Jan. 13.

Said Cohn of the looming change, “it has nothing to do with J.P. Morgan, it has nothing to do with Citigroup. It has nothing to do with Bank of America. It has to do with being a player in a global market where we should, could and will have a dominant position as long as we don’t regulate ourselves out of that.”

Trump’s executive order will challenge a mandate imposed by the Department of Labor called the fiduciary rule, which seeks to hold investment advisers to a standard of acting in their clients best interests. This rule, set to go in effect in April, will be repealed, Cohn said, because it will limit consumer choice. The DoL said late on Friday it will “consider its legal options to delay the applicability date as we comply with the President’s memorandum.”

Consumer Protection Agencies On The Chopping Block

Finally, it appears the Trump administration may seek to replace CFPB head Richard Cordray, in a first step towards neutralizing the regulatory agency.

Only months ago, the CFPB led an investigation into Wells Fargo that revealed the bank had created thousands of fake savings and credit card accounts without the consent of consumers. When employees raised their voices against these practices, they were fired. The scandal rocked Wells Fargo, leading to the quick resignation of CEO John Stumpf, and it spawned a host of regulatory investigations.

The CFPB has also played prominently in combating usury, improper foreclosure practices, and payday loans that can leave the poor under a mountain of debt. The Trump administration, however, feels the CFPB has over-reached and made businesses hesitant to grow.

Cohn further hinted that he and Treasury Secretary Mnchin are prepared to overhaul Fannie Mae and Freddie Mac, two housing agencies that guarantee the vast majority of prime mortgages in the United States but were put into government conservatorship in 2008.

“I’m not sitting here saying we want to go back to the good old days,” Cohn told the WSJ of the planned overhaul. He said the Trump administration could write better, more efficient regulations and also expressed confidence that the market – smarter from the lessons of the crisis – would be able to regulate itself as restrictions were loosened.

Democrats will fight Trump’s deregulatory push, and it is too be seen whether a rollback will be so easy to pull off. Even in the wake of a severe crisis that germinated from Wall Street, it took years of battle to sign Dodd Frank into law. Furthermore, it is the current heads of many agencies, nominated by President Obama, who will initially be tasked with reforms.

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