copyrighted image Getty Images The president of the united States, Donald Trump, on Friday signed a new executive order that asks for a review, with a view to a possible to remove, of various measures of regulation to the financial sector contained in the Dodd-Frank Act, passed in 2010, during the tenure of his predecessor, Barack Obama.
The regulations to the banks had increased as a measure to prevent the recurrence of abuses that led to the global financial crisis of 2008.
Trump had said during his campaign that he would lift many of these regulations to give more dynamism to the economy.
banks have complained that the rules imposed by the Dodd-Frank Act was overly restrictive.
Disaster
“Dodd-Frank is a disaster,” he said at the beginning of the week.
“This law is an example of massive state intervention is too much”, said a senior official from the White House to the journalist Tara McKelvey BBC last Thursday.
Assured that a change in the rules would give more power to the consumer to make financial decisions for “independent”.
Banks too big
The Dodd-Frank Act sought to address the problem of banks “too big to fail”, the idea that the banks would take excessive risks because they assumed that no government would risk dropping them on the bankruptcy, to the impact that you could have your collapse in the rest of the economy.
For this reason, the previous government of Obama sponsored legislation that forced banks to reduce their levels of debt.
he Also created a council on financial stability oversight, which sought to promote discipline in the market.
All this with the purpose of preventing a situation like the one presented at the end of 2008.
At that moment, several financial institutions, including the legendary Lehman Brothers, collapsed to the effects of a mortgage crisis, in which banks had bought billions of dollars in mortgage-backed securities, which had lost its value.
In the last months of the administration of George W. Bush, and the first of Barack Obama, the authorities injected billions of dollars of public funds to ensure the soundness of large banks, as it was feared that these were “too big to fail”.
at The time that millions of americans were losing their homes, the bankers were rewarded with state bailouts to their companies, a situation that generated a great deal of rejection in the public opinion and helped galvanize passage of the Dodd-Frank Act in 2010.
consumer Protection
The standard promoted by Obama also introduced elements of protection of the public from potential abuses by financial institutions, by a new agency, the Bureau of Consumer Financial Protection.
After 2008 it is said that part of the mortgage crisis was caused by unscrupulous lenders , taking advantage of the little financial literacy of many americans, they had been induced to borrow beyond their capacity of payment.
so that the rules establishing strict codes of conduct for financial firms in order to avoid what are known as “predatory lending”.
The executive order signed by Trump pointing in the opposite direction.
For example, postponed for 180 days of the entry into force of the so called rule of fiduciary responsibility proposed by Obama, which required that financial advisors put the interest of their clients first when they were giving advice on investment in pensions.
The rule sought to prevent the financial advisors lead clients into investments with fees and higher rates that could reduce your savings for retirement.
But critics said the rule limiting the financial options available to pensioners, by forcing financial firms to advise them options of low risk.
As has happened with other executive orders Trump, announced on Friday is just the first step to an eventual reform of the laws governing the financial sector in the united States.
But since they already show a major change of direction in the work of the State to prevent further abuse of the financial sector.
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