Putting Economy at Risk, Trump Vows to "Do A Big Number" on Dodd-Frank
President Donald Trump's pick to head the Treasury Department, Steven Mnuchin, also has promised to "kill" parts of the law
On the same day he signed an executive order aimed at massive deregulation, President Donald Trump told a group of small business leaders that he plans to "do a big number on Dodd-Frank," the Obama-era bill enacted to rein in big banks and prevent another financial crisis.
"Dodd-Frank is a disaster and we're gonna do a big number on Dodd-Frank," he said at the White House on Monday.
He made similar pledges to "dismantle" Dodd-Frank on the 2016 campaign trail and since his election in November, and the New York Times notes that Trump's pick to head the Treasury Department, Steven Mnuchin, "also has promised to 'kill' parts of the law, including the so-called Volcker rule restricting banks from making certain kinds of speculative investments of the kind that led to the 2008-9 global economic crisis." The Senate Finance Committee is set to vote on Mnuchin's confirmation on Monday afternoon.
Further signaling the financial reform act is in the Trump administration's crosshairs, Vice President Mike Pence spoke on the subject at last week's GOP congressional retreat in Philadelphia.
"We will roll back the recent avalanche of regulations stifling American growth starting next week," Pence reportedly said. "It means slashing tax reform, slashing rates for businesses and working families, passing regulatory relief of the [Congressional Review Act] to prevent bureaucrats from crushing the economy and the American people's dreams from the comfort of taxpayer-funded offices in Washington D.C., and it means dismantling Dodd-Frank's laws and overbearing mandates so that well-capitalized, well-regulated banks can meet the needs of small businesses."
But as former assistant treasury secretary for financial institutions and professor of law and public policy at the University of Michigan Michael Barr warned in December:
Ending Dodd-Frank would be deeply misguided and likely to recreate the very conditions that led to the 2008 financial crisis, shuttered American businesses, and cost millions of Americans their jobs. The financial sector will get a nice sugar high for a few years, and then crash the economy.
That doesn't seem to faze Republicans who are financially backed by the same institutions that have been gunning for Dodd-Frank since the day it passed Congress. On the same day as Pence spoke, House Financial Services Committee chairman Jeb Hensarling (R-Texas) issued a statement agreeing with the vice president and reaffirming his commitment to tearing down the law and replacing it with the so-called Financial CHOICE Act—dubbed last year by Sen. Elizabeth Warren (D-Mass.) a "wet kiss for Wall Street."
"We cannot allow Republicans to take us back to the depths of the financial crisis by weakening regulatory oversight and giving banks the tools to game the system once again," Warren declared last year.
But it looks like that's just what President Trump wants to do.