Trump to issue directives targeting Dodd-Frank, retirement advice rule

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By Ayesha Rascoe and Sarah N. Lynch

<span class="articleLocation”>U.S. President Donald Trump on Friday will fire
the opening salvo in his campaign to scale back major
regulations that resulted from the financial crisis, directing a
review of the Dodd-Frank Act and putting the brakes on a
retirement advice rule. The executive order Trump will sign on the 2010 Dodd-Frank
law on Wall Street reform will be a first step towards rolling
back the regulations that Trump sees as hurting the economy, but
without rewriting the legislation, which can be done only
through Congress. One prominent measure is the “Volcker rule”
that greatly restricts how banks can make bets with their own
money.

Expectations of simpler bank regulations helped push up
stocks on Wall Street in early trading.

“The first thing that we are going to attack is regulation,
over-regulation. It’s not just in the financial markets, it’s in
all markets,” said White House National Economic Council
Director Gary Cohn on Fox Business Network. “So today you’re
going to start seeing the beginning of some of our executive
actions to roll back regulation in the financial services
market.”

The landmark 2010 Dodd-Frank law was the biggest Wall Street
regulatory overhaul in decades. It set out a long list of rules
intended to keep the financial system from experiencing a repeat
of the 2007-09 crisis, including strict new capital standards on
banks and tighter oversight of derivatives. The act also created
a new consumer protection watchdog to guard against predatory
lending and called for identifying banks and other institutions
considered “too big to fail” that are subjected to annual stress
testing.

The impact of the directives remains to be seen. Analysts
said Trump could make many changes by appointing new personnel
or simply choosing not to enforce rules already enacted.

“A lot of the regulations of Dodd-Frank required a bit of a
cop-on-the-beat if you will, to ensure enforcement and if you
have a different cop-on-the-beat, they enforce different rules,
or they enforce the rules differently,” said FBR & CO financial
policy analyst Edward Mills. “And there are a lot of Dodd-Frank
rules that are subjective and so what one regulator would view
as okay, another might say it’s not okay.”

Earlier this week during a meeting with business owners,
Trump described the law as “a disaster,” a sentiment shared by
fellow Republicans.

On Friday, the Republican-led Congress killed a Dodd-Frank
regulation regarding payments that big energy companies make to
foreign governments. Also, the House Financial Services
Committee is working on a complete Dodd-Frank revamp.

Trump’s moves comes also amid mounting pressure from
Congressional Republicans who want Trump to fire Richard
Cordray, the director of the U.S. Consumer Financial Protection
Bureau. A federal court this autumn ruled the president should
be able to fire the director at will, but the decision was
stayed pending appeal.

Republican Congressman Sean Duffy said earlier this week
that House Financial Services Committee Chairman Jeb Hensarling
is expected to advance his CHOICE Act legislation to weaken
Dodd-Frank later this month.

LABOR DEPARTMENT RULE ALSO UNDER FIRE The Labor Department’s retirement advice rule, set to take
effect in April, is not part of the Dodd-Frank law, but has long
been a thorn in the side of the financial services sector.

Issued by the Obama administration in 2016, the rule
requires brokers to act as “fiduciaries,” or in their clients’
best interests, when they are advising them about their
individual retirement accounts and 401K plans.

That is a departure from the current legal standard, which
requires brokers only to recommend investments “suitable” to
their clients.

Complying could cost firms as much as $31 billion over the
next decade, according to Labor Department estimates.

Trump plans on Friday to issue a memo asking the Labor
Department to determine whether the rule should be revised or be
scrapped altogether, according to the White House.

“We think that they have exceeded their authority with this
rule and we think this is something that is completely
overreaching,” the official said.

Opponents of the rule argued it would raise costs and make small accounts unprofitable.

They have also said the Securities and Exchange Commission,
which regulates the brokerage sector, should take the lead on
writing new rules because it has more expertise.

Dodd-Frank gave the SEC the authority to craft its own
fiduciary rule for brokers, but so far, the agency has not
advanced such a measure.

Trump’s memo on the fiduciary rule is likely to spark major
pushback by Democrats, who say the rule is key to protecting
consumers from conflicts of interest.

“President Trump’s action will make it harder for American
savers to keep more of what they earn,” said Ohio Democratic
Senator Sherrod Brown in a statement early Friday.

The U.S. Chamber of Commerce and other financial services
trade groups have filed a legal challenge to the rule seeking to
have it overturned. The federal judge reviewing the case
signaled in a court filing on Thursday she plans to issue a
decision no later than Feb. 10. (Additional reporting by Richa Naidu and Lisa Lambert)



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