Banking and Finance Law Daily Congress, industry reacts to executive order requiring regulatory review
News
Monday, February 6, 2017

Congress, industry reacts to executive order requiring regulatory review

By Colleen M. Svelnis, J.D.

An Executive Order issued by the White House directs the Secretary of the Treasury to conduct a 120-day review of financial system regulation, to determine what rules promote or inhibit the administration’s priorities. Many believe this is the first step to a roll back of financial reforms put in place after the financial crisis of 2008 (see Banking and Finance Law DailyFeb. 3, 2017). Reaction was swift, strong and along party lines.

Banking committee members weigh in. Senate Banking Committee Chairman Mike Crapo (R-Idaho) stated that directing the Secretary of Treasury to consult with the heads of the member agencies of the Financial Stability Oversight Council and reporting to the President within 120 days is "a step in right direction to get financial regulation right." On the other hand, Senate Banking Committee member Catherine Cortez Masto (D-Nev) declared that the orders instead show that Trump proved "he wants to make it easier—not harder—for another crisis to occur" Cortez Masto stated that the commonsense reforms were "put in place to hold Big Banks accountable" and that "Trump has re-opened the door for actions that seriously threaten the economic and financial security of hardworking Americans." And committee member Sen. Mark R. Warner (D-Va) stated that the financial crisis "destroyed millions of jobs, devastated home values, and froze lending to consumers and small businesses" with many still struggling to recover. Warner emphasized that "we cannot afford to undo Dodd Frank’s essential safeguards."

Strong commitment. Chief Deputy Whip Patrick McHenry (R-NC) released a statement asserting that "Dodd-Frank’s regulations have driven up costs and made credit less available for families and small businesses." He said Congress and the Trump Administration’s "strong commitment" will help ensure "long-term financial security" for Americans and small businesses. McHenry asserted that "Dodd-Frank’s regulations have driven up costs and made credit less available" and that the executive orders "illustrate Congress and the Trump Administration’s strong commitment to ensuring long-term financial security for American families and small businesses." Rep. Roger Williams (R-Tex) called the Dodd-Frank Act "one of the most damaging laws to ever come out of Washington." Williams stated that Dodd-Frank "has made it more difficult to borrow money, it has increased the cost of compliance measures and it has forced community lenders out of business." Ted Budd (R-NC) and Tom Emmer (R-Minn) agreed that the Dodd-Frank Act has hindered small businesses and banks. Rep. David Kustoff (R-Tenn) also stated that Dodd-Frank "unjustly targeted small businesses." Rep. Mia Love (R-Utah) called the actions "a bold step toward achieving the priority of faster economic growth and job creation, and expanded economic opportunity."

‘Puts Wall Street first’. The executive actions are an attempt to roll back the most significant regulations on Wall Street since the Great Depression, stated Maxine Waters (D-Calif). According to Waters, the executive order on financial regulation "puts Wall Street first." She described how Dodd-Frank was signed into law to prevent another financial crisis and another bailout. "Its reforms prevent banks from engaging in shady practices that could lead to another crisis, provide for a stable wind down for an institution if it happens to get into trouble, and empowers regulators to keep a close eye on banks so they don't step out of line."

Representative Elijah E. Cummings (D-Md) said post-financial crisis reforms worked and their rollback "will be a massive gift to Wall Street billionaires by their new best friend in Washington." In a statement, Bill Foster (D-Ill) said that reforms like the Dodd-Frank Act "allow for effective oversight of Wall Street, protecting against the kind of economic recession that cost millions of jobs for working families." He called the orders "a dangerous first step towards making our financial system more vulnerable to another collapse." And Jim Himes (D-Conn), who helped author Dodd-Frank, said that "a return to 2008 will not accomplish the stated goals" of the President’s action.

Consumers unprotected. Illinois Attorney General Lisa Madigan condemned the order. According to Madigan, America needs "strong advocates and laws against Wall Street greed and other financial fraud." Madigan stated that without the critical consumer protections against another financial crisis, "the vast majority of Americans will have no one protecting their financial interests."

Industry associations respond. A statement by SIFMA President and CEO Kenneth E. Bentsen, Jr. commended the administration for taking the action, noting that "It is imperative to ensure that our financial regulatory framework does not unnecessarily impede capital formation that drives job creation, economic growth and investor opportunity in this country." Trade association FIA President and CEO Walt Lukken applauded the order, stating that "now is the time to review and simplify the regulations put in place following the financial crisis and determine whether these regulations are in fact meeting their public objectives."

National Community Reinvestment Coalition President and CEO John Taylor called the executive order "an affront to families and communities across the country." Taylor stated that the administration is "serving Wall Street." Marc Jarsulic, Vice President for Economic Policy at the Center for American Progress, denounced the "craven attempt to put Wall Street’s interests ahead of American consumers and economic growth and return the United States to a vicious cycle of booms, busts, and taxpayer bailouts at the expense of American working families." According to Jarsulic, a "wholesale dismantling" of the Dodd-Frank Act, is a "threat to the United States’ economic future."

Companies: Center for American Progress: FIA: Financial Stability Oversight Council: National Community Reinvestment Coalition: SIFMA

MainStory: TopStory CFPB DoddFrankAct FinancialStability Receiverships TrumpAdministrationNews UDAAP VolckerRule

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More