| WASHINGTON
WASHINGTON U.S. President Donald Trump on Friday will fire the opening salvo in his campaign to scale back major regulations that resulted from the financial crisis, directing a review of the Dodd-Frank Act and putting the brakes on a retirement advice rule.
The executive order that Trump will sign on the 2010 Dodd-Frank Wall Street reform law will not overhaul the legislation, a senior official told reporters in a briefing late Thursday.
Rather, it will mark a first step toward making changes to the law, including the "Volcker rule" provision that greatly restricted how banks can make bets with their own money.
"This is not an attempt to undo Dodd-Frank," the official said.
The landmark 2010 Dodd-Frank law marked the biggest Wall Street regulatory overhaul in decades.
The law imposed strict new capital standards on banks and brought derivatives and private funds into the fold of federal regulation. Its "Volcker rule" provision banned banks from proprietary trading, and the act also created a new consumer protection watchdog to guard against predatory lending.
Earlier this week during a meeting with business owners, Trump described the law as "a disaster."
The official said the executive order will ask the Treasury secretary to work with other regulators to determine what the administration can do to fix issues with measures issued under the Dodd-Frank law.
"There are quite a few things that we could do on Dodd-Frank ... that we think will have fairly immediate and dramatic impact," the official said.
This could include personnel changes at regulatory agencies or additional executive orders, the official added.
The executive order comes amid mounting pressure by Congressional Republicans who want Trump to fire Richard Cordray, the director of the U.S. Consumer Financial Protection Bureau.
The Republican push to oust Cordray has intensified since the fall, after a federal court ruled the president should be able to fire the director at will. That decision has been stayed amid a pending appeal.
Asked whether Trump will take such a step, the official said only that there are "a variety of ways we're going to have to do certain activities."
Exactly how much impact Friday's executive order will have on Dodd-Frank remains to be seen.
"He cannot unilaterally undo Dodd-Frank," said Edward Mills, a financial policy analyst at FBR & Co. "If he wants to undo the regulations of Dodd-Frank, that is going to take years and probably next to impossible, legislatively."
The official said in the briefing that part of the changes to Dodd-Frank will come in the form of legislation.
Republican Congressman Sean Duffy said earlier this week that House Financial Services Committee Chairman Jeb Hensarling is expected to advance his CHOICE Act legislation to weaken Dodd-Frank later this month.
LABOR DEPARTMENT RULE ALSO UNDER FIRE
The Labor Department's retirement advice rule is not part of the Dodd-Frank law, but has long been a thorn in the side of the financial services sector.
Issued by the Obama administration in 2016, it is set to take effect in April.
The rule requires brokers to act as "fiduciaries," or in their clients' best interests, when they are advising them about their individual retirement accounts and 401K plans.
That is a departure from the current legal standard, which requires brokers only to recommend investments "suitable" to their clients.
Complying could cost firms as much as $31 billion over the next decade, according to Labor Department estimates.
Trump plans on Friday to issue a memo asking the Labor Department to determine whether the rule should be revised or be scrapped altogether, the official said.
"We think that they have exceeded their authority with this rule and we think this is something that is completely overreaching," the official said.
Opponents of the rule argued it would result in high costs that will ultimately make small accounts unprofitable.
They have also insisted the Securities and Exchange Commission, which regulates the brokerage sector, has more expertise and should take the lead on writing new rules.
Dodd-Frank gave the SEC the authority to craft its own fiduciary rule for brokers, but so far, the agency has not advanced such a measure.
Trump's memo on the fiduciary rule is likely to spark major pushback by Democrats, who say the rule is key to protecting consumers from conflicts of interest.
"President Trump’s action will make it harder for American savers to keep more of what they earn,” said Ohio Democratic Senator Sherrod Brown in a statement early Friday.
The U.S. Chamber of Commerce and other financial services trade groups have filed a legal challenge to the rule seeking to have it overturned. The federal judge reviewing the case signaled in a court filing on Thursday she plans to issue a decision no later than Feb. 10.
(Reporting by Ayesha Rascoe and Sarah N. Lynch; additional reporting by Richa Naidu; Editing by Lisa Shumaker and Chizu Nomiyama)
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