An article by Charles Hastie, Regulatory Head, Clutch Group, entitled “ Trump Administration Fires Starting Gun in Race to Deregulate” has been published by Inside Counsel. An excerpt from the article has been pasted below.
Trump Administration Fires Starting Gun in Race to Deregulate
Now, the question is no longer whether the government has lost its appetite for regulation, but rather just how quickly will we see a complete rollback occur.
Last week, President Trump fired the starting gun in the race to deregulate financial markets. The President kicked off a day of meetings with Wall Street leaders saying, “We expect to be cutting a lot out of Dodd-Frank.” The resulting two executive orders signal a 180-degree reversal to the global regulatory community.
In November, voters made their sentiments known when they cast their ballots an anti-establishment, free market presidential candidate. Since then, conservative lawmakers and the financial services industry have coalesced around a dramatic shift in political rhetoric towards banks – from demonized capitalists to heroes of middle class wealth generation.
We noted the beginning of this shift in November shortly after the presidential election. Now, the question is no longer whether the government has lost its appetite for regulation, but rather just how quickly will we see a complete rollback occur. As White House National Economic Council Director and Wall Street veteran Gary Cohn confirmed on Friday, “Today you’re going to start seeing the beginning of some of our executive actions to roll back regulation in the financial services market.”
Trump’s executive orders take aim at the Obama Administration’s post-crisis reforms, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act. One executive order requires the Treasury Department to conduct a 120-day review of financial regulation and report recommendations. The administration outlined Core Principles to guide financial regulation, including “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis.” The move is largely symbolic as the administration’s intent to upend the law’s requirements is no secret.
This action marks a stark departure from nearly a decade of compliance-driven operations in the financial services industry. For years, banks have devoted seemingly endless time and resources to implementing massive regulatory change. We could see many of these regulatory requirements evaporate overnight.
Take the Volcker Rule for example. Banks are estimated to have spent between $400 million and $4 billion in Volcker Rule implementation according to the Office of the Comptroller of the Currency. The rule restricting proprietary trading is expected to be one of the first suggestions for cutting by this review effort as politicians allege it has caused banks to withdraw from trading, drying up liquidity and making it too difficult to raise money in the capital markets.