President Trump moved to roll back the Obama administration’s legacy on financial regulation on Friday, announcing an array of steps to undo rules enacted to prevent a repeat of the 2008 financial crisis and turning to the Wall Street titans he had demonized during his campaign for advice.
After a White House meeting with the business executives on Friday, Mr. Trump signed a directive calling for a rewriting of major provisions of the Dodd-Frank Act, crafted by the Obama administration and passed by Congress in response to the 2008 meltdown, the White House said. A second directive he signed is expected to halt and possibly require an overhaul of an Obama-era Labor Department rule that requires brokers to act in a client’s best interest, rather than seek the highest profits for themselves, when providing retirement advice.
Taken together, the actions constitute a broad effort to loosen regulations on banks and other major financial companies, put into motion by a president who campaigned as a champion of working Americans and a harsh critic of Wall Street and other global elites.
On Friday, Mr. Trump said his actions were intended to ease constraints on banks and enable them to lend more to companies, which could then hire more workers.
“We expect to be cutting a lot out of Dodd-Frank because frankly, I have so many people, friends of mine that had nice businesses, they can’t borrow money,” Mr. Trump said in the State Dining Room during his meeting with business leaders. “They just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”
As he announced his goals on financial deregulation, Mr. Trump sat beside Stephen A. Schwarzman, the chief executive of the private equity giant the Blackstone Group and the chairman of his business council, who said the panel would “advise the government on the areas where we could do things a lot better in our country, for all Americans.”
The president had praise for Jamie Dimon, whose bank, JPMorgan Chase, was often a target of regulatory actions by the Obama administration.
“There’s nobody better to tell me about Dodd-Frank than Jamie, so you’re going to tell me about it,” Mr. Trump said.
The meeting underscored the degree to which the architects of Mr. Trump’s economic strategy are now some of the people he denounced in his campaign, which ended with a commercial that described “a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations.”
The advertisement included an image of the chief executive of Goldman Sachs, which has become a virtual feeder for top Trump administration officials. Steven Mnuchin, his nominee for Treasury secretary, is a former Goldman Sachs trader and a hedge fund manager. Gary Cohn, the chairman of his Council of Economic Advisers, was Goldman’s No. 2 executive, and Stephen K. Bannon, Mr. Trump’s chief strategist, is a former Goldman banker.
The president’s actions came just hours after congressional Republicans voted to repeal an unrelated Dodd-Frank rule, a sign that Mr. Trump will have the support he needs on Capitol Hill to upend a law he has called “a disaster,” and promised to do “a big number” to reshape.
While the president cannot unwind Dodd-Frank with the stroke of a pen, his orders set the tone for the regulatory agencies enforcing the rules, including the Securities and Exchange Commission. And the orders, which Democrats and consumer groups immediately denounced as gifts to the Wall Street companies that ignited the 2008 crisis, could portend even more executive actions that direct the regulators to halt financial regulation.
The actions are the latest sign that Mr. Trump, despite striking a populist tone during the campaign, is working to accommodate Wall Street and other corporations.
“The administration apparently plans to turn over financial regulation to Wall Street titan Goldman Sachs, and make it easier for them and other big banks like Wells Fargo to steal from their customers and destabilize the economy,” said Lisa Donner, executive director of Americans for Financial Reform, an advocacy group that supports Dodd-Frank. “That betrays the promises Trump made to stand up to Wall Street, and it will have dire consequences if he’s successful.”
The president’s deference to the visiting executives — he also heaped praise on Laurence D. Fink, the head of the investment firm BlackRock, for managing money for the Trumps and earning “great returns” — sharply contrasts with his predecessor. President Barack Obama once remarked that “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.”
Following the new president’s lead, congressional Republicans on Friday started chipping away at Dodd-Frank, one of Mr. Obama’s signature achievements. The Republicans used an unusual parliamentary procedure to repeal a rule that stems from the law with only a majority of votes rather than the 60 votes needed to overcome a filibuster.
The Senate voted 52 to 47 to void the rule, which requires oil companies to publicly disclose payments they make to governments when developing resources around the world. The rule, which Dodd-Frank assigned to the Securities and Exchange Commission to enforce, was tangential to Dodd-Frank’s mission of reforming Wall Street, but lawmakers included it anyway with the hope of exposing bribes and corruption.
Some of the largest American oil companies objected to the S.E.C. rule, including Exxon Mobil, arguing that it put them at a competitive disadvantage with foreign companies. Rex W. Tillerson, Mr. Trump’s secretary of state, personally lobbied against it when he was the top executive of Exxon Mobil, according to public accounts.
“Big Oil might have won the battle today, but I’m not done fighting the war against entrenched corruption that harms the American people’s interests and leaves the world’s poor trapped in a vicious cycle of poverty while their leaders prosper,” said Senator Benjamin L. Cardin of Maryland, the top Democrat on the Senate Foreign Relations Committee, who along with former Senator Richard Lugar, a Republican, sponsored the amendment in Dodd-Frank requiring the S.E.C. to write the oil disclosure rule.
Friday’s Senate vote, which came after the House voted to repeal the rule, was the congressional Republicans’ opening salvo on Dodd-Frank. As long as President Obama was in power, Republicans had limited ability to attack Dodd-Frank, which was enacted in 2010. In 2014, they managed to gut a financial derivatives rule as part of broader spending bill, but other tweaks have been relatively modest.
Now emboldened, House Republicans are also moving legislation to “repeal and replace” Dodd-Frank, though they would need 60 votes to accomplish that. And they are considering potential ways to use the budget process to defund some aspects of the law, all of which comes on top of the president’s executive actions.
Wall Street is expected to lobby Mr. Trump’s financial regulators, at the S.E.C. and elsewhere, to modify rules and enforce them lightly. This effort could drag on for years.
President Trump, however, wasted no time declaring war on Dodd-Frank. After calling the law “a disaster” on Monday, the president on Friday signed the directive instructing the Treasury Department and financial regulators to construct plans to revise Dodd-Frank. An order like that could empower the regulators to tweak the rules.
But there is a limit to what the regulators can do. Dodd-Frank is still the law, and it requires the regulators to enforce hundreds of Dodd-Frank rules. Under administrative law, the regulators must also formally propose any new rules and seek public comment.
The Trump administration may have an easier time voiding the Obama-era Labor Department rule requiring brokers to act in a client’s best interest when providing retirement advice. That rule is not explicitly part of Dodd-Frank.
“President Trump’s action will make it harder for American savers to keep more of what they earn,” Senator Sherrod Brown, the ranking Democrat on the Senate Banking Committee, said in a statement. “Families who are struggling to save and invest for a secure retirement now have to worry that financial institutions aren’t putting their customers’ interest first.”
With the oil company disclosure rule, Republicans started smaller, using an obscure law to undo it.
Under the Congressional Review Act of 1996, Congress has at least 60 days to introduce legislation disapproving major new regulations — and can ultimately repeal these regulations with only 51 Senate votes, rather than the normal 60 needed to overcome a filibuster.
The Congressional Review Act offers Republicans a narrow window to act on a dozen or so Dodd-Frank rules that were recently completed. Republicans may target a financial derivatives rule adopted last year by the Commodity Futures Trading Commission, a Consumer Financial Protection Bureau rule for prepaid debit cards and a rule approved by banking regulators that imposed capital requirements for banks that trade derivatives.
Until now, this tactic has led to a repeal measure being signed into law only once, in 2001, when Republicans and President George W. Bush wiped out workplace safety regulations adopted near the end of President Bill Clinton’s administration.
The Congressional Research Service has determined that rules sent to Congress on or after June 13 of last year are vulnerable to repeal under the Congressional Review Act. The S.E.C. rule just missed that cutoff; it became final on June 27, making it fair game for Republicans to repeal, over the objections of antipoverty groups like Oxfam and the One Campaign, co-founded by Bono, the lead singer of U2.
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