Dodd-Frank Bank Regulations Smacked Like a Skillet to the Head

Updated at 12:19 p.m. with local comment.

Kicking off an effort to roll back regulations enacted after the 2008 financial crisis, President Donald Trump signed two executive orders on Friday.

The administration official who previewed Friday's executive order said the law had, among other things, created "new agencies that don't actually protect consumers".

White House National Economic Council Director Gary Cohn says that limits consumer choice.

Dodd-Frank also expanded the whistleblower program so that people within those banks and financial institutions can speak up about wrongdoing.

One of the revelations that came out in the wake of the financial crisis is that financial firms were dumping on their customers investments they knew to be bad.

The impact of the directives remains to be seen. In particular, Cohn has said that nonbanks should not be designated as SIFIs.

Now, Trump is expected to take his first whack at Dodd-Frank today.

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Trump echoed those sentiments during his meeting with business leaders.

Cohn is a former Goldman Sachs chief operating officer, who has previously said Dodd-Frank regulation hindered the flow of capital to businesses. And ever since Dodd-Frank passed, commercial lending has been increasing quite smartly, at about 10 percent per year. Republican lawmakers are pushing Trump to fire Cordray, but a federal court's decision giving him power to do so has been stayed pending appeal.

Financial stocks received a further boost after Mr Trump ordered a 180-day delay to the introduction of a "fiduciary rule" that restricts the advice that brokers can give to retirees.

But it's Trump's second order signed Friday - to delay, by 180 days, the implementation of the labor department's "fiduciary rule" - which might be the biggest concern for consumers anxious about their finances, reported Reuters. Well, the reason financial advisers are required to follow their clients' fiduciary interests, rather than assuming that the logic of the free market will naturally produce optimal scrupulousness, is that investing is extremely complex.

The Department of Labor "fiduciary rule" would affect about $3 trillion in retirement assets, according to research firm Morningstar Inc. Federal Reserve staff in December published a paper in December that found that the Volcker rule had a negative effect on corporate-bond liquidity, or the ease with which buyers and sellers can find each other.

Opponents of the rule argued it would raise costs and make small accounts unprofitable. Details of the order were not immediately available, but the action wasn't expected to make immediate changes to financial regulations.

The move drew mixed reactions from securities industry players in St. Louis.

On Friday morning, Trump complained that some of those rules, created to ensure banks keep enough money in reserve to withstand a financial shock without needing government bailouts, are holding back lending.

  • Ronnie Bowen