President Trump Signs Order To Start Dismantling Dodd-Frank

Posted by Patrick Barnard on February 03, 2017 No Comments

As had been anticipated, President Donald Trump today signed an executive order instructing Secretary of the Department of the Treasury to formulate a plan for rolling back – or perhaps even repealing – the Dodd-Frank Wall Street Reform Act.

President Trump signed the order with White House National Economic Council Director Gary Cohn and House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, by his side.

The measure is the first step in Trump’s plan to do whatever he can, administratively, to roll back Dodd-Frank without necessarily having to run the changes through Congress.

Prior to signing the order, Trump held a meeting with small business owners during which he promised to do “a big number” on the Dodd-Frank Act, the signature piece of legislation drafted in response to the 2008 financial crisis and subsequent housing meltdown. He said the law, which took effect in 2010, had damaged the country’s “entrepreneurial spirit” and limited access to credit.

“Regulation has actually been horrible for big business, but it’s been worse for small business,” the president said during the meeting with small business owners. “Dodd-Frank is a disaster.”

“We’re signing new rules for regulating the U.S. financial system,” Trump later declared as he signed the order, as per a Bloomberg News report. “It doesn’t get much bigger than that, right?”

The details of the executive order are not yet public, so, it is still too soon to say which parts of the Dodd-Frank Act could be repealed. A major looming question for the mortgage industry, however, is whether the order will result in the dismantling of the Consumer Financial Protection Bureau (CFPB) – or a significant curtailing of its powers. The order could also result in the creation of a new leadership structure for the CFPB – moving it from its current single leader structure to a committee-led structure – and could also call for congressional oversight of the bureau’s budget and spending.

A senior White House official, speaking on the condition of anonymity, told the press earlier today that “Some of the rules [enacted under Dodd-Frank] may have even been unconstitutional, creating new agencies that don’t actually protect consumers” – an obvious reference to the CFPB and it single leadership structure. However, some people close to the situation have said that it is more likely that the administration will keep the CFPB intact.

Hensarling released a statement on Friday saying that much of the order “mirrors” the Financial CHOICE Act, a Republican-backed bill which he helped draft that would repeal and replace Dodd-Frank.

“I’m very pleased that President Trump signed this executive action, which closely mirrors provisions that are found in the Financial CHOICE Act to end Wall Street bailouts, end ‘too big to fail,’ and end top-down regulations that make it harder for our economy to grow and for hardworking Americans to achieve financial independence,” Hensarling says in the statement.

“When Dodd-Frank was passed, Americans were promised a healthier economy, an end to bailouts and better consumer protections,” Hensarling adds. “Instead, we have the weakest recovery in history, a guarantee of more Wall Street bailouts, and consumer costs have gone up while their choices have gone down. Today the big banks are bigger and the small banks are fewer. Everything from mortgages to credit cards to monthly checking fees costs more because of Dodd-Frank’s red tape, if consumers can even get access to them.”

“Dodd-Frank failed to keep its promises, but President Trump is following through on his promise to the American people to dismantle Dodd-Frank,” Hensarling concludes. “That’s not what Wall Street wants, but it is what hardworking Americans need to have a healthy economy with more opportunities so they can achieve financial independence. Republicans are eager to work with the president to end and replace the Dodd-Frank mistake with legislation that holds Wall Street and Washington accountable, ends taxpayer-funded bailouts forever, and unleashes America’s economic potential.”

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