Just when Wall Street was starting to wonder whether President Donald Trump really would be good for business, the new administration is delivering on Wall Street’s wish list.
Trump will sign an executive order Friday designed to roll back the regulatory system put in place to prevent another financial crisis, a White House official said. Among the targets are rules that protect against predatory lenders, force brokers to lower fees for retirees and ban proprietary trading.
Chief executives including Goldman Sachs Group Inc.’s Lloyd Blankfein and JPMorgan Chase & Co.’s Jamie Dimon have been pushing those kinds of changes for years, arguing that the industry has been too constrained by the system put in place by the 2010 Dodd-Frank Act. After Trump focused on limiting trade and immigration during his first two weeks in office -- policies opposed by many in the financial industry -- the president’s stroke of a pen unleashes a process to undo many of the rules they find most irksome.
“We’re going to attack all aspects of Dodd-Frank,” Gary Cohn, director of the White House National Economic Council, said Friday in an interview with Bloomberg Television. “We are going to engage the House, we’re going to engage the Senate. They are equally interested in reforming some of the regulatory processes as well. We can do quite a bit without them, but the more help we get from Congress the better off we’re all going to be.”
U.S. equity markets, which had dropped earlier in the week amid the immigration controversy, climbed toward recent record highs Friday, with financial stocks leading the way. The 63-company S&P 500 Financials Index advanced 1.7 percent at 10:54 a.m. in New York. Goldman Sachs and Morgan Stanley each surged more than 4 percent.
Cohn, until recently the No. 2 executive at Goldman Sachs, and Steven Mnuchin, the former banker Trump nominated for Treasury Secretary, are advising the president on the rule changes. Before signing the executive order, Trump plans to meet with Dimon and the other members of his economic advisory panel, led by Blackstone Group LP CEO Steve Schwarzman.
Dimon and other CEOs have complained that the rules tie up resources that could otherwise be used to boost lending and help stimulate the economy.
“Every place a bank needs to hold capital and they need to retain capital prohibits them from lending,” Cohn said in the interview.
The restrictions haven’t prevented a jump in new lending. U.S. commercial banks had $9.19 trillion in loans and leases outstanding at the end of last year, according to data compiled by Bloomberg from Federal Reserve statistics. That’s a $558 billion increase, or 6.5 percent, over 2015, the data show. Of that, $2.1 trillion are business loans, a 7.3 percent advance from the prior year.
Lending to small businesses and farms fell for several years after the 2008 crisis, but has grown consistently by a quarterly average of 2 percent since 2013, according to data from the Federal Deposit Insurance Corp.