US President Donald Trump moved to chisel away at the Obama administration's legacy on financial reform, announcing a series of steps to revisit the rules enacted after the 2008 financial crisis and setting the stage for a showdown with Democrats over the future of Wall Street regulation.
After a White House meeting with the executives, Mr Trump signed a directive calling for his administration to identify potential changes to provisions of the Dodd-Frank Act, crafted by the Obama administration and passed by Congress in response to the 2008 meltdown.
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A second directive he signed will effectively halt 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.
The executive order impacting Dodd-Frank is vague in its wording and broad in its reach; it never mentions the Dodd-Frank law by name, instead laying out "core principles" for regulating the financial system, including empowering American investors and enhancing the competitiveness of American companies.
!["We expect to be cutting a lot out of Dodd-Frank because frankly, I have so many people, friends of mine that had nice ...](/web/20170204003640im_/http://www.canberratimes.com.au/content/dam/images/g/u/5/f/o/v/image.related.articleLeadwide.620x349.gu5fm4.png/1486162837246.jpg)
But it amounts to a broad grant of authority to the Treasury Department to find ways of restructuring major provisions of Dodd-Frank, directing the secretary to conduct a sweeping review of existing laws and make sure they align with the administration's goals.
Mr Trump's action on the fiduciary rule will have a more immediate impact. His memorandum directs the Department of Labor to review whether the rule may "adversely affect" investors' ability to access financial advice — and if it does, he authorised the agency to rescind or revise the rule.
The rule's supporters, including Democratic lawmakers and consumer groups, describe it as a basic consumer protection that can prevent brokers from taking advantage of vulnerable clients. The industry argues, however, that the rule will expose it to a torrent of lawsuits and will lead firms to pass on the costs to consumers.
Taken together, the president's 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 critic of Wall Street elites.
![The executive order impacting Dodd-Frank is vague in its wording and broad in its reach; it never mentions the ...](/web/20170204003640im_/http://www.canberratimes.com.au/content/dam/images/g/t/m/3/q/i/image.related.articleLeadwide.620x349.gu5fm4.png/1486162837246.jpg)
On Friday, Mr Trump said his actions were intended to help both Wall Street and workers as his administration eases constraints on banks and enables them to lend to companies, which could then hire more workers.
"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.
![The President had praise for JPMorgan's Jamie Dimon. "There's nobody better to tell me about Dodd-Frank than Jamie, so ...](/web/20170204003640im_/http://www.canberratimes.com.au/content/dam/images/g/u/5/f/o/l/image.related.articleLeadwide.620x349.gu5fm4.png/1486162837246.jpg)
"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."
Leaning on Dimon for advice
As he announced his goals on financial deregulation, Mr Trump sat beside Stephen 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 people he denounced 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 national economic council, was Goldman's No. 2 executive, and Stephen Bannon, Mr. Trump's chief strategist, is a former Goldman banker.
The President's actions came just hours after congressional Republicans voted to repeal an unrelated Dodd-Frank rule, a sign that Mr Trump will have the support he needs on Capitol Hill to upend 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.
New York Times