Business

Trump moves to ease Wall Street regulations, review 'fiduciary rule' for retirement advisers

U.S. President Donald Trump signed two executive actions aimed at reforming financial services regulations on Friday: reviews of the 2010 Dodd-Frank Act regulating banks and a rule requiring retirement advisers to act in their clients' best interests that was to take effect in April.

U.S. president orders reviews of 2010 Dodd-Frank Act, stricter rules for retirement advisers

Trump signs order to review financial regulations

CBC News

4 years ago
1:33
U.S. President Donald Trump signs an executive order directing the treasury secretary to review the 2010 Dodd-Frank financial oversight law 1:33

U.S. President Donald Trump signed two executive actions aimed at reforming financial services regulations on Friday. One was an executive order to review the 2010 Dodd-Frank Act regulating banks and the other was a presidential memorandum calling for review of a rule requiring retirement advisers to act in their clients' best interests.

"We expect to be cutting a lot out of Dodd-Frank," Trump told the press before sitting down with top U.S. business leaders and CEOs on Friday morning.

"Friends of mine that have nice businesses, they can't borrow money. They just can't get any money, because the banks … just won't let them borrow because of the rules and regulations in Dodd-Frank." 

Dodd-Frank was signed by President Barack Obama in the wake of the 2008-09 financial crisis and designed to improve regulatory oversight, protect consumers and end government bailouts of major banks.

The executive order does not specifically mention Dodd-Frank, but instead directs the secretary of the treasury to review existing laws and regulations and report on whether they are consistent with six "principles of regulation" laid out by the Trump administration. That could lead to recommendations for reform by Congress.

The Regional Bank Coalition, which represents mid-sized financial institutions, welcomed Trump's directive.

"Dodd-Frank's one-size-fits-all approach for all institutions above $50 billion has created an improperly calibrated environment that harms our institutions and our customers," said spokesman Matt Well in statement.

Retirement savings industry rules under review

The rules affecting the retirement savings industry were set to take effect in April, and full compliance would have been required by January 2018.

Under the so-called fiduciary rule, brokers who sell stocks, bonds, annuities and other products would have to do more than just make sure the investments they recommend are "suitable" for clients. They would have to meet a stricter standard that has long applied to registered advisers: They will be considered "fiduciaries" — trustees who must put their clients' best interests above all.

U.S. President Donald Trump signs an executive order intended to begin the process of rolling back regulations from the 2010 Dodd-Frank law on Wall Street reform. (Kevin Lamarque/Reuters)

Too often, regulators say, brokers steer clients toward questionable investments for which the broker receives a fee, thereby acting in their own financial interest instead of the client's.

Wall Street lobbying groups, mutual fund companies, life insurance firms and other industry interests have opposed the rules. They say the stricter requirements could limit many people's access to financial guidance and retirement planning and their choice of investment products.

"President Trump's action will make it harder for American savers to keep more of what they earn," said Senator Sherrod Brown, a member of the Senate Banking Committee, in a statement.

Trump meets business leaders

Trump met with business leaders before signing the executive actions. He reiterated his administration's core economic goals before that meeting: "bringing back jobs," reducing regulations and cutting taxes.

"We're going to be coming up with a tax bill very soon, a health-care bill even sooner," he said.

Trump also lauded Friday's U.S. employment report showing 227,000 new jobs created in January as evidence of "great spirit in the country right now."

Trump met with top U.S. business leaders and CEOs before signing the two orders on Friday. (Kevin Lamarque/Reuters)

Since being sworn in as president, Trump has met with the leaders of the Detroit Three automakers, as well as pharmaceutical company executives.

Trump's close relationship with business leaders seems to be at odds with the anti-elite message of his presidential campaign.

That message, summed up in a controversial November campaign ad, described "a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth, and put that money in the pockets of a handful of large corporations and political entities."

Members of Trump's business advisory council in attendance at the White House on Friday included:

  • Jamie Dimon, CEO of JPMorgan Chase.
  • Elon Musk, founder and CEO of Tesla.
  • Indra Nooyi, CEO of PepsiCo.
  • Jack Welch, former CEO of General Electric.
  • Mary Barra, CEO of General Motors.
  • Doug McMillon, CEO of Wal-Mart.
  • Lawrence Fink, CEO of BlackRock.
  • Rich Lesser, CEO of Boston Consulting Group.
  • Ginni Rommety, CEO of IBM.
  • Steve Schwarzman, CEO of Blackstone.
  • Jim McNerney, former CEO of Boeing.

"We're going to talk about how to create jobs, how to create wealth in America. We want to support that agenda," McNerney told reporters.

Uber CEO Travis Kalanick quit Trump's advisory council on Thursday following pressure from Uber users opposed to Trump's executive order temporarily barring citizens of seven Muslim-majority countries from entering the U.S. 

Tesla CEO Musk said he would use the Friday meeting to raise objections about the policy.

Corrections

  • An earlier version of this story incorrectly stated that U.S. President Donald Trump signed two executive orders Friday. In fact, he signed one executive order and one presidential memorandum.
    Feb 03, 2017 4:59 PM ET

With files from The Associated Press and Reuters

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