Dodd-Frank, targeted by Trump and Mnuchin
Steven Mnuchin, Donald Trump's Treasury Secretary designee, made a lot of the banking fortune of his amid the fallout of the 2008 financial crisis, buying and reselling a distressed bank of California.
Now, the 53-year old former Goldman Sachsbanker will have the President-elect's ear in an effort to roll back the Dodd-Frank Act, legislation put in place with the goal of preventing such a crisis.
Revising Dodd-Frank is “the number one priority on the regulatory side,” Mnuchin told CNBC Wednesday.
Trump's changes might be much like a modification of the rules drafted by CongressmanJeb Hensarling, chairman of the House Financial Services Committee. Earlier this particular year, Hensarling, probably the most vocal critics of Dodd Frank, introduced the Financial Choice Act. Its proposals include removing smaller banks from several ofDodd Frank's specifications and easing capital needs on big banks. Additionally, it would scrap the so called Volcker Rule, which limits banks' speculative trading utilizing consumer deposits, and restructure the Consumer Financial Protection Bureau.
Changes to the rule could possibly result in banks being examined less frequently for derivatives trading or an expansion of the types of derivatives allowed, Ziegler says.
“It’s unlikely the Volcker Rule is completely eliminated,” he says. “But certain provisions may be reversed that gives banks more discretion. It could inject a great deal more risk.”
Mnuchin didn’t provide details on the Volcker Rule when pressed by CNBC. But he said “the number one problem” with it is that “it’s too complicated.”
Critics of the CFPB have additionally pressed to undermine the oversight structure of its. The agency, funded by the Federal Reserve, remains impartial of Congressional oversight. But the banking business would love to view it funded by Congress and for the director of its to be replaced by a five member commission, a situation which some state would threaten the freedom of its.
The agency “has been a very welcome addition to the regulatory landscape,” he says. “It’d be a shame to make consumers more vulnerable to predatory lenders and retail financial firms,” Ziegler said.
