While surrounded by GOP lawmakers at the White House on Thursday, President Trump signed legislation aimed at bringing regulatory relief to smaller financial institutions.
A rewrite only, in signing the Financial Choice Act, Mr. Trump effectively began to pull apart the massive regulatory statutes codified in the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in the wake of the financial meltdown in 2010.
As a presidential candidate, Trump vowed to “do a number on Dodd-Frank.”
“Dodd-Frank’s costly regulations gave large banks a negative advantage at the cost of small banks throughout the country,” Trump said at an Oval Office ceremony.
Under the provisions of the new law, financial institutions which manage $50–$250 billion in assets are now free of regulations set in Dodd-Frank.
By raising the asset threshold for Dodd-Frank regulations to take effect, the number of banks or other financial institutions falling under the 2010 law was reduced from 38 to 12.
The bill also gives consumers the right to free credit freezes and also weakened the Volcker Rule, which placed heavy regulations on small banks’ right to invest with depositors’ savings.
Smaller financial institutions, those with less than $10 billion in assets, won the most concessions in the bill, including being freed from regulations which monitored escrow and appraisal requirements and restrictive measures under the Home Mortgage Disclosure Act.
“We fought anything that would be added to the bill for the mega banks that would jeopardize the effort,” said Paul Merski, a small bank lobbying firm executive “We managed to get this legislation done in spite of the mega banks.”
According to Reuters, America’s largest financial institutions lobbied for less oversight by the Consumer Financial Protections Bureau and less stringent liquidity ratio requirements — both of which were not included in the bill.
A bill which received bipartisan support, the measure passed in the Senate with support from 17 Democratic senators; in the House, 33 Democratic members joined Republicans to secure its passage. Some GOP officials said they intended to advance more housing relief provisions in separate bills.
A law which was harshly criticized upon passage in 2010 for its excessive regulation on small, community banks, it was estimated Dodd-Frank cost the U.S. financial industry over 80 million man hours and $40 billion in compliance costs yearly.
In the seven years since its passage, economists have concluded lending restrictions Dodd-Frank placed on banks were one of the primary causes of the slow pace of the post-recession recovery between 2010 and 2017.
[CNBC] [Reuters] [Photo courtesy AP/Evan Vucci via Deseret News]