Trump to sign Wall Street Reform

President Donald Trump will sign executive orders on Friday to review the Dodd-Frank Wall Street reforms and halt a Labor Department rule designed to curb potential conflicts among brokers who give retirement advice,  according to a White House spokeswoman.

Trump's move marks a step toward making good on a campaign promise to dismantle the 2010 Dodd-Frank law, which was passed in the wake of the 2007-2009 financial crisis. 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 intends to sign a separate presidential memorandum to roll back 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 a close Trump Wall Street ally Anthony Scaramucci, who call it burdensome and costly.

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

“Many of the regulations created by Dodd-Frank would be difficult to eliminate without action from Congress, but there are a number of changes that regulators can make (especially on the enforcement of these rules) which could have a significant impact on the business models of banks and other financial services firms,” Edward Mills, a policy analyst at investment bank FBR Capital Markets, said in a research report Friday morning.

The Dodd-Frank law, a signature piece of the legacy of former president Obama, was enacted in July 2010 after a brutal battle in Congress.