Trump Begins Assault on Dodd-Frank Financial Regulations
By BEN PROTESS and JULIE HIRSCHFELD DAVIS - The New York Times - Friday, February 3, 2017
President Trump mounted an all-out assault on financial regulation on Friday, announcing an array of steps to tear down safeguards enacted to prevent a repeat of the 2008 financial crisis and turning to the Wall Street titans he had demonized during his campaign for advice.
After a White House meeting with the business executives on Friday, Mr. Trump signed a directive calling for a rewriting of major provisions of the Dodd-Frank Act, crafted by the Obama administration and passed by Congress in response to the 2008 meltdown, the White House said. A second directive he signed is expected to halt and possibly require an overhaul of an Obama-era Labor Department rule that requires brokers to act in a client’s best interest, rather than seek the highest profits for themselves, when providing retirement advice.
Taken together, the actions constitute a broad effort to loosen regulations on banks and other major financial companies, put into motion by a president who campaigned as a champion of working Americans and a harsh critic of global elites. Those elites include Wall Street companies like Goldman Sachs, whose alumni now populate his Cabinet and economic advisory teams.
“We expect to be cutting a lot out of Dodd-Frank because frankly, I have so many people, friends of mine that had nice businesses, they can’t borrow money,” Mr. Trump said in the State Dining Room during his meeting with business leaders. “They just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”
As he announced his attack on financial regulation, Mr. Trump sat beside Stephen A. Schwarzman, the chief executive of the private equity giant the Blackstone Group and the chairman of his business council, who said the panel would “advise the government on the areas where we could do things a lot better in our country, for all Americans.”
The president had praise for Jamie Dimon, whose bank, JPMorgan Chase, was often a target of regulatory actions by the Obama administration.
“There’s nobody better to tell me about Dodd-Frank than Jamie, so you’re going to tell me about it,” Mr. Trump said.
The meeting underscored the degree to which the architects of Mr. Trump’s economic strategy are now some of the very people he lambasted in his campaign, which ended with a commercial that described “a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations.”
The advertisement included an image of the chief executive of Goldman Sachs, which has become a virtual feeder for top Trump administration officials. Steven Mnuchin, his nominee for Treasury secretary, is a former Goldman Sachs trader and a hedge fund manager. Gary Cohn, the chairman of his Council of Economic Advisers, was Goldman’s No. 2 executive, and Stephen K. Bannon, Mr. Trump’s chief strategist, is a former Goldman banker.
The president’s actions came just hours after congressional Republicans repealed an unrelated Dodd-Frank rule, a sign that Mr. Trump will have the support he needs on Capitol Hill to eviscerate a law he has called “a disaster,” and promised to do “a big number” to reshape.
While the president cannot unwind Dodd-Frank with the stroke of a pen, his orders set the tone for the regulatory agencies enforcing the rules, including the Securities and Exchange Commission. And the orders, which Democrats and consumer groups immediately denounced as gifts to the Wall Street companies that ignited the 2008 crisis, could portend even more executive actions that direct the regulators to halt financial regulation.
The actions are the latest sign that Mr. Trump, despite striking a populist tone during the campaign, is working to accommodate Wall Street and other corporations.
“The administration apparently plans to turn over financial regulation to Wall Street titan Goldman Sachs, and make it easier for them and other big banks like Wells Fargo to steal from their customers and destabilize the economy,” said Lisa Donner, executive director of Americans for Financial Reform, an advocacy group that supports Dodd-Frank. “That betrays the promises Trump made to stand up to Wall Street, and it will have dire consequences if he’s successful.”
The president’s deference to the visiting executives — he also heaped praise on Laurence D. Fink, the head of the investment firm BlackRock, for managing money for the Trumps and earning “great returns” — sharply contrasts with his predecessor. President Barack Obama once remarked that “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.”
Following the new president’s lead, congressional Republicans on Friday started chipping away at Dodd-Frank, one of Mr. Obama’s signature achievements. The Republicans used an unusual parliamentary procedure to repeal a rule that stems from the law with only a majority of votes rather than the 60 votes needed to overcome a filibuster.
The Senate voted 52 to 47 to void the rule, which requires oil companies to publicly disclose payments they make to governments when developing resources around the world. The rule, which Dodd-Frank assigned to the Securities and Exchange Commission to enforce, was tangential to Dodd-Frank’s mission of reforming Wall Street, but lawmakers included it anyway with the hope of exposing bribes and corruption.
Some of the largest American oil companies objected to the S.E.C. rule, including Exxon Mobil, arguing that it put them at a competitive disadvantage with foreign companies. Rex W. Tillerson, Mr. Trump’s secretary of state, personally lobbied against it when he was the top executive of Exxon Mobil, according to public accounts.
“Big Oil might have won the battle today, but I’m not done fighting the war against entrenched corruption that harms the American people’s interests and leaves the world’s poor trapped in a vicious cycle of poverty while their leaders prosper,” said Senator Benjamin L. Cardin of Maryland, the top Democrat on the Senate Foreign Relations Committee, who along with former Senator Richard Lugar, a Republican, sponsored the amendment in Dodd-Frank requiring the S.E.C. to write the oil disclosure rule.
Posted Friday, February 03 2017 8:31 PM
Tags : Dodd-Frank, Financial Regulations
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