By Nikhil Dhingra
On Friday, according to a preview of the president’s schedule, Donald Trump hopes to take aim at one of Obama administration’s largest accomplishments by considering the removal of key aspects of the Dodd-Frank Act during his meeting with Treasury Secretary Steven Mnuchin. Trump is considering repealing provisions of the act which address the authority of regulators to scale back the power of a bank on the brink of failure as well as their ability to label nonbank firms as risky institutions. Trump is also planning to sign an executive order directing Mnuchin to review any tax regulations that may be burdensome to the everyday American consumer.
The Dodd-Frank Act, a law passed in response to the 2008 global financial crisis, aimed to add more financial regulations to avoid another crisis of such magnitude. Targeting banks that were once considered “too big to fail,” Dodd-Frank implemented the most significant changes to financial regulatory policies since the Great Depression. As a result, then-President Obama passed the bill in Congress without a single House Republican vote and only three Senate Republican votes amidst GOP criticism that the regulations were too extensive.
Trump discussed repealing the act on the campaign trail, where he claimed that the massive amounts of complex regulations are failing to allow banks to properly conduct their business. “Bureaucratic red tape and Washington red tape are not the answer [to improve the banking system],” according to a statement from Trump’s campaign team on the matter.
In fact, Trump has already begun to dismantle Obama-era banking regulations. An executive order was signed in February asking Congress to review the policies enacted to combat the 2008 financial crisis. Due to the vague language of the Executive Order, the Department of Treasury has been given relatively expansive abilities to revise Dodd-Frank regulations. In addition, Trump signed a controversial executive order to remove the fiduciary rule, which states that brokers must act in the best interests of their clients.
Despite all of these drastic maneuvers to deregulate Wall Street, some believe that any attempts to repeal the act may suffer the same fate as the American Health Care Act (AHCA). The AHCA, intended to replace Obamacare, was pulled from Congress a few hours before the final vote amid concerns that there was not enough support amongst both House Republicans and Democrats. Similar to the defeat of the AHCA, critics such as Jerry Rogers, a writer for The Hill, believe that the bill failed due to its inability to attract rank-and-file conservatives as it was drafted. Rogers points towards the Financial Choice Act, spearheaded by House Republican Jeb Hensarling, and its ability to establish a conservative consensus on removing the Consumer Financial Protection Bureau (which many Republicans considered to be one of the worst aspects of the Dodd-Frank Act). Rogers believes that, if Speaker of the House Paul Ryan can establish a consensus on repealing Dodd-Frank that is as strong as Hensarling’s, then the bill might get through Congress.