On Friday, President Trump was expected to sign an executive action rolling back Dodd-Frank, the regulatory system Barack Obama instituted in 2010 after the financial crisis of 2008. Trump was also expected to order a review of the Labor Department’s fiduciary rule, which was to go into effect in April.
Dodd-Frank established a number of new government agencies, including the Financial Stability Oversight Council and Orderly Liquidation Authority, which monitored the financial stability of major firms whose failure was deemed dangerous for the economy and had the power to dismantle banks considered so large they posed a systemic risk. The FSOC also could force banks to increase their reserve requirements.
The Consumer Financial Protection Bureau (CFPB) was established to prevent predatory mortgage lending and supervised consumer lending, including credit and debit cards. The Volcker Rule trimmed the routes banks could use to invest, limiting speculative trading and eliminating proprietary trading. It also regulated financial firms’ use of derivatives to ward off “too-big-to-fail” institutions from taking large risks.
The Labor Department’s fiduciary rule, which Trump’s team views as unnecessarily restricting investor choice, orders retirement advisers to act in the best interest of their clients. White House National Economic Council Director Gary Cohn explained to The Wall Street Journal that under the rule companies would be forced to offer retirement products with the lowest fees even if it isn’t best for their client.
As The Heritage Foundation explained in their volume, “The Case Against Dodd–Frank: How the ‘Consumer Protection’ Law Endangers Americans,” the expectation that the government could mandate solvency and eliminate business cycles is futile; as AEI’s Peter Wallison pointed out, preventing prevent future bailouts would entail getting the government out of the private sector; if companies knew they wouldn’t be rescued, they’d eschew taking risks. Paul Kupiec Dodd–Frank’s orderly liquidation authority (OLA), which was a “special” process for shutting down failed financial firms, presumed falsely that large financial companies couldn’t be reorganized in bankruptcy without destabilizing financial markets.
As Norbert J. Michel wrote, “The inconvenient truth about Dodd-Frank is that it embraces policies that do not address the causes of the last crisis, lays the groundwork for the next crisis, and impedes economic growth in the interim.”
Cohn stated, “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. The banks are going to be able to price product more efficiently and more effectively to consumers.” He added that existing regulations from Dodd-Frank are so sweeping that banks cannot lend money efficiently, saying, “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.”
Boot George Soros out of america ban him for life being able to return to america revoke his citizenship as well
The Dodd-Frank regulatory changes protect the public and taxpayers from irresponsible behavior on the part of the financial industry.
Bullshit. If financial industry CEOs escape with with millions in personal gains as their companies collapse behind them on their way out the door, why should they care if the companies are rescued or not? The writer doesn’t seem to understand the nature of the problem. It’s individual human greed, and individual greedy humans allied together into predatory groups. There’s nothing inherently evil about the corporate structures they inhabit, utilize, and abuse, any more than there’s something inherently evil about a ship that a crew of pirates are sailing in.
It’s the behavior of the pirates that’s the problem. You only control that by watching them closely, and regulating their behavior.
the terrorist pres. was irresponsible, a traitor and a high class welfare recipient so what is your demorat point-again.
@MOS #8541, #3:
My point is that you’ve put the foxes in charge of the hen house.
Why do you imagine for even a moment that the elitist billionaires who have profited enormously from the dysfunctional practices that have left much of America’s industrial heartland in ruins are interested in reversing that trend?
They’re interested in another round of tax cuts, regulatory roll-backs that will increase their profits even further, and another round of financial industry shake-downs benefiting big players and insiders.
They’re where they are owing to diligent pursuit of their own self-interests. Furthering your interests only coincides with that goal coincidentally, if at all.
While there are billionaire humanitarian altruists—people who have turned their skills, contributions, and the extraordinary good fortune that followed to the betterment of humanity—you don’t see Trump’s cabinet filling up with that sort, do you? It’s because Donald Trump is not that sort.
More democrat pablam, blah, blah, blah….
Her money came from the Amway’s questionable marketing scheme. Trump has always admired a good grey-area marketing hustle.
A few facts about the money involved, from Center for American Progress :
What were you saying earlier about the Clintons, and “pay to play?” That was all based on vaguely imagined correlations between contributions to the Clinton Foundation charity and subsequent interactions, all far less specific than this one. Here we have a billionaire family essentially buying a cabinet position.
How House Republicans plan to defund Elizabeth Warren’s little agency of tyranny
We told you on Monday about the special challenge Republicans face in what to do about the Consumer Finance Protection Bureau. It’s a totally out of control administrative agency gifted with immense powers by Dodd-Frank, and designed by its architect – Elizabeth Warren – to be almost impossible for a Republican to get a job at. Oh, and Congress is required by statute to fund it. CFPB’s director, left-wing zealot Richard Cordray? The president can fire him only “for cause,” and that’s a lot more complicated than at-will employment.
Democrats designed the CFPB this way intentionally during the Obama Administration, so that any future Republican president would find the agency impossible to get control over. But in the House, anyway, Republicans are refusing to accept the inevitability of the CFPB running roughshod over businesses in the private sector. In today’s Wall Street Journal, Congressman Jeb Hensarling lays out a path for defunding and getting rid of this rogue agency:
The CFPB is arguably the most powerful, least accountable agency in U.S. history. CFPB zealots have the power to determine the “fairness” of virtually every financial transaction in America. The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process. It requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk. It can compel the production of reams of data and employ methodologies that “infer” harm without finding any specific instance of harm or knowing violation.
The regulatory web spun by the CFPB can make every provider of financial services guilty until proven innocent, inviting selective enforcement and financial shakedowns. The CFPB is the embodiment of James Madison’s warning in Federalist No. 47 that “the accumulation of all powers, legislative, executive and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny.”
This tyranny has harmed the very consumers it purports to help. Since the CFPB’s advent, the number of banks offering free checking has drastically declined, while many bank fees have increased. Mortgage originations and auto loans have become more expensive for many Americans.
No corner of American finance is beyond the CFPB’s grasp, even auto dealers—which are specifically excluded from its jurisdiction by the Dodd-Frank Act. To dodge this legal constraint, the CFPB regulates auto dealers through enforcement “bulletins” on auto lenders, employing statistical analysis rather than specific acts to charge lenders with discriminatory lending. The race of borrowers is inferred based on the borrowers’ names and home addresses. Through this ruse they smear and shake down lenders.
Yet even with good policy, the CFPB would still be unconstitutional. For those who reject Sen. Warren’s view that the ends justify the means, the agency must be functionally terminated. Consumer protection can instead come through an accountable and constitutional process.
The Senate can achieve this with a simple majority vote. Dodd-Frank requires the Fed to fund all CFPB budget requests automatically—creating an estimated $6.6 billion funding stream over the next 10 years. Under a budget process known as reconciliation, the House Financial Services Committee, which I chair, and the Senate Banking Committee could be mandated to save $6.6 billion over 10 years of the budget. In the ensuing reconciliation bill the two committees could then direct the Fed to terminate CFPB funding. Senate Democrats could not filibuster the bill.
I’m guessing you can’t explain why it makes sense to anybody but financial sector gamblers and pirates not to intervene on behalf of the taxpayers and the public when financial entities big enough to crash the entire economy make irresponsibly risky moves.
Nor why retirement vehicles should be allowed to engage in dangerous speculation, exposing unsuspecting retirement fund investors to unacceptable levels of risk.
Nor why derivatives—which are nothing more than a monopoly-money house of cards that could all come crashing down in the blink of an eye—should be allowed to be made the very foundation of our entire financial system.
The only thing wrong with Dodd-Frank is that it wasn’t allowed to go far enough for safety. The people telling you otherwise are those out to make a quick million or billion, at the risk of the entire system.
What should we expect from Donald Trump? The man is a billionaire gambling casino entrepreneur, and a master at making big profits while shifting the risks and costs of failures to others—and that’s a fact.
Who Will Be in Charge on Monday? That’s the Question in Agency Battle
The fox’s man, put in charge of overseeing the security of the hen house… It’s getting to the point where nothing this administration tries to get away with can surprise me.
What happened in the absence of adequate federal regulation and oversight. This epic financial scam, or something like it, will happen every time we let our guard down. We have once again dropped our guard.
RIght. Got it. So yeah, go ahead and invest our pension funds in that.
OK. That also sounds good. (In fact, I don’t even understand it when I read the explanation in print.)
And then the perpetrators escape with the loot, their accomplices get bailed out at taxpayer expense, the CEOs who managed the bailouts get multi-million dollar bonuses, and the republicans raise holy hell when democrats demand that such bonuses be paid back. Nobody goes to jail, and the little people caught up in the investment scam and the taxpayers get screwed. That I can understand. It’s called getting away with robbery.
But who needs pesky financial regulation?
@Greg: Pensions have always sucked, a matching contribution into 401K plan where the money is in control of the earner have always been better. Where does the money go after the pensioner dies? With a 401 set up as payable upon death the money earned by the investor goes to the heirs, like your house, collection of rare beanie babies and other as seen on TV stuff you have accumulated.
The pension plans of 1.5 million coal miners, truckers, bakery workers and other retirees nationwide are currently on the brink of failure. But the miners’ pension fund, the UMWA 1974 Pension Plan, will be the first of all these major plans to go insolvent, in the Plan’s 2022-23 fiscal year.
Public employees pension s promised are just not there. Will the government charge in to save them, we see how well they have managed Social Security.
@kitt: Greg believes that most of the public is as dumb as he is. Actually, most of us who are not democrats have invested quite well over the years and will be negatively affected by Dodd-Frank.