President Donald Trump will order a sweeping review of the Dodd-Frank Act rules enacted in response to the 2008 financial crisis, a White House official said, signing an executive action Friday designed to significantly scale back the regulatory system put in place in 2010.
Trump also will halt another of former President Barack Obama’s regulations, hated by the financial industry, that requires advisers on retirement accounts to work in the best interests of their clients. Trump’s order will give the new administration time to review the change, known as the fiduciary rule.
Taken together, the actions are designed to lay down the Trump administration’s approach to financial markets, with an emphasis on removing regulatory burdens and opening up investor options, said the White House official, who briefed reporters on condition of anonymity.
The orders are the most aggressive steps yet by Trump to loosen regulations in the financial services industry and come after he has sought to stock his administration with veterans of the industry in key positions. His plans are sure to face fierce criticism by Democrats who charge that Trump is intent on undoing changes designed to protect everything from average investors to the global banking system.
He also could face a backlash from some of his own supporters, whose distrust of big institutions and the financial industry helped fuel the populist anger that propelled Trump to the White House.
‘Big Number’
Trump is scheduled to issue the directives at a signing ceremony around noon following a meeting of more than a dozen top corporate executives led by Blackstone Group LP Chief Executive Officer Steve Schwarzman.
On Monday, Trump promised to do “a big number” on the Dodd-Frank Act during a meeting with small business owners. He said the law had damaged the country’s “entrepreneurial spirit” and limited access to needed credit.
“Regulation has actually been horrible for big business, but it’s been worse for small business,” the president said. “Dodd-Frank is a disaster.”
Trump’s Treasury secretary nominee Steven Mnuchin will meet with members of the Financial Stability Oversight Council and report back on what changes the administration should take to alter Dodd-Frank, the official said. Particular attention will be paid to the Volcker Rule limits on banks making speculative bets with their own funds, an restriction promoted by former Federal Reserve Chairman Paul Volcker.
Immediate Impact
The official wouldn’t say how long the Treasury Department would have to complete its review, but did say that the administration would be looking for ways to make an immediate impact, including through administrative changes and personnel decisions.
Trump’s directive also stalls the so-called fiduciary rule -- set to take effect in April -- that the Obama administration said would protect millions of retirees from being steered into inappropriate high-cost or high-risk investments that generate bigger profits for brokers.
The review will include examining making personnel changes at financial regulators as a way of accomplishing the administration’s objectives, the official said. They declined to answer a question on whether Trump would try to fire Richard Cordray, the director of the Consumer Financial Protection Bureau. The official did say the administration believed that some of the rules created under Dodd-Frank may have been unconstitutional, including the creation of new agencies, an apparent reference to the bureau.