Remember when money wasn’t really backed by money and the cost of real estate really wasn’t backed by it’s worth on the market? Remember when unemployment rates jumped upward pensions disappeared and so many homes were lost due to the housing bubble? We are heading back in that direction.
The White House today made moves to make things easier on the banks by opening the door to remove the regulations of Dodd-Frank. Trump’s signing of an executive order today to lift the same regulations that were put in place after the 2008 financial crises, means the reins put in place to protect consumers, will be gone.
The Dodd-Frank legislation forced banks to take steps to insure they held more capital that they took in and had to prove that each year by submitting to “stress tests” to insure they could withstand another economic crises.
“We expect to be cutting out a lot of Dodd-Frank,” Trump said, …” because, Frankly, I have so many people, friends of mine, that had nice businesses, they just can’t borrow money.” The move he made today will make it easier for some to borrow, just like it did when homes were bought that families couldn’t pay for – property that was not backed by collateral or proper credit.
Trump also made a separate signing that delays the Labor Department rules that requires financial professionals to put their clients’ interests ahead of their own.
“The order comes as the fate of the rule is also being weighed in the courts,” the Washington Post reported. Major business groups, including the Chamber of Commerce, are challenging the rule.
While Trump’s order does not mention Dodd-Frank, it does direct the Treasury Secretary to report back in 120 days regarding what rules will promote or inhibit his administration’s priorities. The Washington Post article also states the several high-profile CEO’s including Larry Fink of the investment firm Blackrock, were present at the meeting.
The Post’s story further quoted Trump as saying, ‘“Larry’s got a lot of my money and I have to tell you, he got me great returns,” Trump said to laughs in the room.”’
Sen. Elizabeth Warren tweeted, “After literally standing next to the Wall St. CEOs, @realDonaldTrump made it easier for investment advisors to cheat you out of your savings.”
Some regulations in Dodd-Frank cannot be changed by Trump’s orders, but the changes his administration can make should have a momentous effect on bank business models. Trump’s order could also affect the Consumer Protection Bureau, an agency that have cracked down on big banks and kept them from misleading consumers.