NEW YORK (CNNMoney) -
The impetus for the dismantling of the wide-ranging reform Dodd-Frank Wall Street has begun.
The president Donald Trump promised Friday that his administration will be “cutting back much of Dodd-Frank.”
The republican signed an executive order this Friday, according to the White House spokesman, Sean Spicer.
The move will not make any immediate changes. Instead, seek the opinion of the heads of the federal regulatory agencies on changes to the Dodd-Frank act, which was enacted in 2010 to protect against another financial collapse on Wall Street.
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The impetus of deregulation arises when Trump meets with a team of executive directors of star with its advisory council, among whom are Jamie Dimon, CEO of JPMorgan.
“there is nobody better than to talk to me about Dodd-Frank to Jamie,” said Trump this Friday.
Another big name on Wall Street, the former president of Goldman Sachs, Gary Cohn, served as the face of the administration’s efforts Dodd-Frank on Friday.
Cohn, that advantage being the main economic adviser to Trump, gave interviews on television and in newspapers to explain how the regulations heavy and slow down the growth.
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“we’re Going to attack all aspects of Dodd-Frank,” said Cohn to Bloomberg. “We want the banks to be back in the business of lending”.
on Friday, senator Elizabeth Warren asked Cohn to refrain from putting matters directly or indirectly related to Goldman Sachs because of the 285 million dollars with which he left the Wall Street firm.
investors are already encouraged by the efforts desreguladores. The shares of large banks such as JPMorgan, Wells Fargo and Citigroup extended their growth after the elections to gather more than 2% each this Friday. Goldman Sachs, which has one of the best performance since the victory of Trump, exceeded the 4%.
But to speak of the dismantling of Dodd-Frank makes you feel some uncomfortable.
“Apparently, the administration plans to deliver the financial regulation, the holder of Wall Street, Goldman Sachs,” said Lisa Donner, executive director of Americans for Financial Reform, a coalition of not for profit press for accountability on Wall Street.
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Donner fears that the efforts of deregulation will make it easier for “large banks like Wells Fargo steal your customers and disrupt the economy.”
Michael Barr, exsubsecretario of the Treasury under Obama, said that the general direction that it is taking the government is making the financial system is “less secure and less fair.”
Few believe that Trump will move to repeal entirely to Dodd-Frank and there is a lot of uncertainty about precisely which parts of the reform are in the executive order.
Some of the points of the regulation, Dodd-Frank could be adjusted by Trump through executive action, while other parts require of Congress.
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A bill sponsored by the republicans so-called “Financial Choice Act” would eliminate the Volcker Rule, which prohibits banks to make risky bets with their own money, and also the Bureau of Consumer Financial Protection (CFPB, for its acronym in English), the guard dog inspired in Warren that has pursued large banks such as Wells Fargo.
The White House spokesman echoed republican complaints about the CFPB, saying that Dodd-Frank created a new agency unconstitutional that does not adequately protect consumers.”
The nominee of the secretary of the Treasury, Steven Mnuchin, has said that he thinks the CFPB worth to keep it, but suggested that it should be funded by Congress, not by the Federal Reserve. Such a measure could impair the independence of the CFPB, allowing the republicans the depriving of funds.
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Mnuchin has said he wants to reform the Volcker Rule to make sure there are no unintended consequences that will harm the markets.
Another key issue: the banks had grown so much that the government had no choice but to rescue them when it collapsed.
Spicer argued Friday that despite the “overcoming” of Dodd-Frank, failed to resolve one of the central issues of the financial crisis: too big to fail banks.
“We determine conclusively that the failure of a big bank will never again leave taxpayers on the hook,” he said.
One way that Trump could try to address this question is by altering the Supervisory Board of the Financial Stability (FSOC for its acronym in English).
Cohn said to The Wall Street Journal new orders that could change the FSOC, which was created by Dodd-Frank as a way to monitor the risks in the system, dismantle safely the firms collapsing and supervising large banks, non-bank known as systemically important financial institutions.
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