How will Donald Trump policies affect financial regulations 2017? Will dismantling Dodd-Frank Act help? What do the financial experts want to say?
13 February, AtoZForex – Deputy Governor of the Bank of England (BoE), Sir Jon Cunliffe, stated that the changes introduced following the financial crisis had made the financial sector resilient to shocks. He remarked this after the US President Trump ordered a review of the Dodd-Frank Act that was signed into Fed law to prevent another financial crisis by Barack Obama in 2010. Trump gave this order in order to start easing financial regulations 2017. He also said:
“We have made very substantial progress since the financial crisis with increasing the resilience of the financial sector and also increasing its ability to support the economy both nationally and in Europe and globally. Those changes were necessary. None of us want to see the sorts of events again that we saw between 2007 and 2009 and the costs of those events are still very clear.
In order to have resilience of the financial sector and consistent regulation internationally we need international standards and we need the reforms we have had. And it is important we preserve them.”
Why does Trump want to cut a lot out of Dodd-Frank?
US President Donald Trump signed an executive order on February 3rd to start easing financial regulations 2017, thus directing a review of the Dodd-Frank Act. He explained this by stating that the regulations were squeezing lending and hurting US economy. Donald Trump has added:
“We expect to be cutting a lot out of Dodd-Frank because frankly I have so many people, friends of mine, that have nice businesses and they can’t borrow money because the banks won’t let them do so due to the rules and regulations in Dodd-Frank.”
Moreover, Donald Trump’s administration has raised two pertinent questions:
Will it embark on aggressive deregulation of the financial system leaving different regulatory regimes on either side of the Atlantic?
And, if so, will it abandon its efforts for international coordination?
Mr. Trump believes that his countrymen are getting a raw deal in trade with other countries. According to his appointees, they think that European banks are gaining unfair advantages over their US counterparts. José María Roldán, head of the Spanish Banking Association and a former central banker, told a conference in Brussels:
“What United States does, the rest of the world does three years later.”
Gary Cohn on financial regulations 2017
Gary Cohn, Donald Trump’s senior economic adviser said that American banks were at a huge disadvantage due to the fact that they were carrying much fatter capital cushions. He added:
“We have the best, most highly capitalized banks in the world, and we should use that to our competitive advantage. But on the other side, we also have the most highly regulated, overburdened banks in the world.”
It is not clear how the new US President administration will follow through on its wish to deregulate. But if the Trump’s administration does fixate on deregulation and freeing up its banks, Europe will face a serious choice:
-Does it follow suit or try to go its own way?
-And what happens to international efforts to assure a level for financial institutions in Basel and elsewhere?
Think we missed something? Let us know in the comments section below.