President Trump promised that he would bring in sweeping reforms to “horrendous” U.S. banking regulations that were introduced after the financial crisis of 2008-09.
While referring to the Wall Street and the consumer protection rules his predecessor, Barack Obama, enacted in 2010, President Trump said, “We’re going to do a very major haircut on Dodd-Frank.”
Dodd-Frank was aimed at preventing banks from taking too much risk and separating their investment and commercial arms.
President Trump said he wanted “some very strong” change to help the bank sector. The president told a group of 50 business leaders at a White House meeting:
“We want strong restrictions, we want strong regulation. But not regulation that makes it impossible for the banks to loan to people that are going to create jobs. We’re going to be doing things that are going to be very good for the banking industry so that the banks can loan money to people who need it.”
Trump promised during his election campaign to relax banking rules and subsequently ordered a review of Dodd-Frank through an executive order signed in early February.
Major legislation has to be passed through Congress if any change is to be brought. President Trump’s failure with the health reform has shown how difficult the process could be.
Jamie Dimon, Chairman and Chief Executive of one of the biggest banks in the world, JP Morgan Chase, has fully backed the President’s remarks; or the reverse is also true.
In a letter released on Tuesday, which was addressed to the shareholders, “It is unnecessarily complex, costly and sometimes confusing,” he said of the regulatory burden.
Dodd-Frank was created to resolve the too-big-to-fail issue, which meant that the banks facing breakdown had to be bailed out instead of winding down.
Mr. Dimon reasoned that the banks had mostly solved this problem by increasing the capital they held in reserve and incorporating tougher risk controls.