If Trump wins, he plans to free Wall Street from 'burdensome regulations'
By
Lawrence Delevingne and
Douglas Gillison
WASHINGTON, April 12 (Reuters) - A second Trump White House would seek to sharply reduce the power of U.S. financial regulators, according to a review of public documents and interviews with people allied with the former president.
In the wake of the worst economic crisis since the Great Depression, Congress dramatically expanded the U.S. government's oversight of the financial industry to prevent a repeat of the 2008 global banking meltdown.
Donald Trump would likely renew his efforts to scale back those reforms, if elected, as well as pare protections for small-scale investors and borrowers, and allow companies to raise money with less scrutiny, according to the interviews and proposals from groups positioned to influence a new conservative administration. Reuters spoke with, among others, about a dozen people who have provided advice or been consulted by Trump or his allies.
The Republican Party’s presumptive nominee has not announced a formal policy staff or released detailed positions on how he would regulate Wall Street, aside from short videos and snippets in campaign appearances.
But, the sources told Reuters, a constellation of experts and Trump allies are pitching regulatory rewrites, identifying potential staff and floating ideas on TV, in op-eds and directly to Trump at his Mar-a-Lago Club in Palm Beach, Florida.
Some of the ideas in Trump’s current policy orbit have long circulated in conservative economic conversation. They include curtailing the Dodd-Frank Act, a set of post-2008 financial crisis rules intended to reduce systemic risk. Another idea is to make it easier for private companies to raise capital – in turn opening access to less transparent and more difficult-to-trade private funds and securities.
More recent policy ideas include attacking environmental, social and governance (ESG) investments and disclosures, which help screen businesses based on socially conscious factors, or potential dramatic cuts to staff at regulators through a mechanism known as
Schedule F, which would reclassify up to 50,000 civil servants across the government as easily-replaceable political appointees.
Karoline Leavitt, national press secretary for the Trump campaign, said Trump had success in peeling back regulations during his administration.
"President Trump's pro-growth, deregulatory agenda ignited the greatest economy in history,” Leavitt said in an email to Reuters.
The Trump administration, with
mixed success, opens new tab, worked to reverse a range of Obama-era rules, such as those that
eased regulations for
Wall Street banks or
“fiduciary” rules for brokers.
Excluding the immediate effects of the coronavirus pandemic, official data show unemployment at its lowest since the 1960s under both Trump and Biden. Though pandemic and other distortions can make comparisons difficult, in inflation-adjusted terms the U.S. economy grew more slowly in Trump’s first three years in office (8.1%) than under Biden (10.6%), according to Commerce Department data.
Michael Faulkender, a former Trump Treasury official, has called publicly for
scrapping bank stress testing, opens new tab under the 2010 Dodd-Frank Act in favor of stronger capital requirements, saying that requiring banks to pass the same set of evaluations leaves the system open to collapse if they all run into the same problems at once.
He is now chief economist at the America First Policy Institute (AFPI), which was founded by former Trump officials. Asked about his policy positions, Faulkender pointed to his
previous writing, opens new tab about ESG investing.
“As the academic literature has documented, ESG is too much in the eye of the beholder,” he told Reuters. “Therefore, it can and has been used to deviate from the fiduciary duty that money managers have to their clients, and it has distracted financial supervisors from the safety and soundness criteria that should be used in ensuring the ongoing strength of the U.S. financial system.”
https://www.reuters.com/markets/us/...all-street-burdensome-regulations-2024-04-12/
