President Donald Trump reportedly will sign an executive action Friday to scale back the regulatory system that was put in place in 2010 in response to the financial crisis. The Trump administration has set out to remove what it views as regulatory burdens by overhauling mortgage financing giants Freddie Mac and Fannie Mae and easing lending regulations.
"Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year," Gary Cohn, White House National Economic Council director, told The Wall Street Journal. "The banks are going to be able to price product more efficiently and more effectively to consumers."
President Trump is to order a sweeping review of the Dodd-Frank Act rules, which will include a close look at how the government supervises big financial firms that aren’t traditional banks, Cohn says. Cohn says that existing regulations under Dodd-Frank have made it too difficult for banks to lend and has limited consumers’ choices of financial products.
Cohn says the Trump administration also is planning to overhaul mortgage finance giants Fannie Mae and Freddie Mac, which have remained under the government conservatorship since the financial crisis.
"This is a table setter for a bunch of stuff that is coming," Cohn says.
The changes are expected to be met with some criticism, particularly among Democrats, who have argued in the past that the regulations protect the average borrowers as well as investors from abusive practices. They have pushed for tighter controls on banks and lenders in response to the subprime mortgage crisis.
"I'm not sitting here saying we want to go back to the good old days," Cohn told The Wall Street Journal. "We have the best, most highly capitalized banks in the world, and we should use that to our competitive advantage. But on the flip side, we also have the most highly regulated, overburdened banks in the world."
Source: “Trump Moves to Undo Dodd-Frank: White House Says Banks Burdened By Rules After Financial Crisis,” The Wall Street Journal (Feb. 3, 2017) [log-in required] and “Trump to Order Review of Dodd-Frank, Halt Obamas Fiduciary Rule,” Bloomberg (Feb. 3, 2017)