Trump signs executive order to reconsider Wall Street regulations

President Donald Trump signed an executive order on Friday to reconsider regulations put in place after the 2008 financial crisis to rein in Wall Street, according to a White House spokeswoman.

The move addressed another one of Trump’s campaign promises: dismantling 2010’s financial overhaul legislation, known as Dodd-Frank. The legislation forced banks to take various steps to prevent another financial crisis, including holding more capital and taking yearly “stress tests” to prove they could withstand economic turbulence. The financial industry, particularly its small community banks, complained the rules went too far.

“We expect to be cutting a lot out of Dodd-Frank,” Trump said during a meeting with business leaders Friday morning. “Because frankly, I have so many people, friends of mine, that had nice businesses, they just can’t borrow money ... because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”

Trump also signed a separate presidential memorandum to delay the Labor Department’s rules that would require financial professionals to put their clients’ interests ahead of their own. The “fiduciary rule,” scheduled to go into effect in April, has long been a target of Republicans, including close Trump Wall Street ally Anthony Scaramucci, who call it burdensome and costly.

The Labor Department should consider whether it could harm investors or disrupt the retirement services industry, Trump’s memorandum said, according to a White House spokesman. The order comes as the fate of the rule is also being weighed in the courts. A decision on a lawsuit from major business groups challenging the rule, including the Chamber of Commerce, could come any day now.

These efforts are sure to anger Democrats in Congress and progressive groups who argue Wall Street needs more oversight, not less. It also will bolster critics who say Trump, despite promising during the campaign to “drain the swamp,” has become cozy with Wall Street since the election. Trump has tapped several Goldman Sachs alumni for key positions in his administration, and his strategic and policy panel is led by Stephen A. Schwarzman, founder of Blackstone, a massive investment firm.

Trump’s order does not mention Dodd-Frank but directs the Treasury secretary to report back in 120 days on what rules promote or inhibit the administration’s priorities.

Trump has said Dodd-Frank is a “disaster” and that he would do “a big number” on the legislation. But it is unclear exactly which provisions he is likely to curtail or kill. The law gave the government new authority to seize and wind down large, troubled financial firms, set up a regulatory council to monitor threats to the financial system and mandate oversight of the vast market for derivatives, the instruments that helped fuel the crisis.

Big banks, which have spent millions complying with the law, have called for a tweaking of the rules, rather than a complete overhaul. Adjusting to a new regulatory environment would be too costly, they say. But smaller banks are expected to push for more aggressive changes. They say they are too small to pose a threat to the financial system but still face extreme regulatory burdens.

This story was originally published February 3, 2017 at 3:49 PM with the headline "Trump signs executive order to reconsider Wall Street regulations."