One of President Trump’s key campaign promises was to dismantle much of the protection put into place after the 2008 financial crisis. Part of the process of the takedown of Dodd-Frank was detailed in a 149-page report submitted on Monday to the administration by Secretary of the Treasury Steven T. Mnuchin, a former hedge fund and banking mogul.
In “Mnuchin calls for major rollbacks of Dodd-Frank financial reforms,” Jim Puzzanghera and James Rufus Koren of the Los Angeles Times detail the substance of the report and other legislative efforts to undercut financial regulations.
Among the changes proposed by Secretary Mnuchin is a near obliteration of the Consumer Financial Protection Bureau, first championed by Sen. Elizabeth Warren (D-MA). (Read 10 Things the Consumer Financial Protection Bureau Has Done for You.) Another change recommended in the Mnuchin report is the loosening of trading safeguards under the Volcker Rule.
The report was the Trump administration’s first formal salvo in what’s expected to be a long and complex process involving Congress and federal agencies to try to scale back regulations that Republicans have complained are harming banks and stifling economic growth.
“A sensible rebalancing of regulatory principles is warranted in light of the significant improvement in the strength of the financial system and the economy, as well as the benefit of perspective since the Great Recession,” the report said.
Democrats and consumer advocates said Dodd-Frank is the reason for that strength, after the system nearly imploded in 2008. They’ve vowed to fight major changes in the law.
“We need more effective regulation and enforcement, not rollbacks driven by Wall Street and predatory lenders,” said Lisa Donner, executive director of Americans for Financial Reform, a group advocating tougher oversight of the financial system.
The report, which included dozens of recommendations, is the first of three ordered by Trump as he looks to fulfill a campaign promise to dismantle the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The legislation was approved by Congress with almost no Republican support in the wake of the 2008 financial crisis.
Dodd-Frank toughened bank regulations, sought to avoid future bailouts by creating a process to shut down teetering financial giants, prohibited federally insured banks from engaging in risky trading, established a powerful panel of regulators to watch for signs of instability and created the Consumer Financial Protection Bureau to oversee credit cards, mortgages and other financial products.
The House last week voted along party lines to approve sweeping legislation — the Financial Choice Act — repealing key provisions of Dodd-Frank.
The Treasury report calls for many of the same changes but in some areas is more moderate than the House bill.
Read more installments in our series “While He was Tweeting” – keeping an eye on Trump’s wrecking ball.