Re: The Dodd-Frank Dilemma
I see very little chance of financial regulation being reformed in any sensible way. The Republican Congress has an ideological aversion to regulation and has bought into a fairy tale that the financial crisis was caused by government failure rather than market failure, even though analysis by the Federal Reserve and other experts has thoroughly debunked these claims.
Why economic growth has been week is widely debated, but other factors have probably been more important than financial deregulation - notably fiscal austerity and increased risk aversion (so that households and businesses are reluctant to spend and borrow). The chaos and uncertainty unleashed by Trump are likely to increase risk aversion further. Even if letting the financial sector rip might boost growth in the short term this would be counterproductive if it planted the seeds for the next financial crisis. It that was to happen on Trump's watch it would be poetic justice but also very scary.
Re: The Dodd-Frank Dilemma
From what I have read the repeal will be partial, and focused mostly on trimming regulations and pleasing Wall St. A Trump supporter on the BBC a while ago, whose name I cannot recall, when asked what he wanted from the Trump Administration said he wanted it to repeal every Executive Order signed by Obama. The aim among some of Trump's staff and supporters is to wipe out as much of the legislation associated with Obama as they can, and one should not underestimate the callous resentment that underlines their visceral loathing of both Obama as a man, and the administration over which he presided. Whether or not revenge is a sound basis for policy remains to be seen.
Re: The Dodd-Frank Dilemma
One of the regulations in the firing line is the fiduciary rule requiring financial advisers to act in the best interests of their clients. This important because the finance industry is riddled with conflicts of interest as marketers of investment products pay financial advisers commissions for shifting their clients into these investments. Most people lack the knowledge to assess whether their adviser is doing the right thing - which is why they engage an adviser in the first place.
So much for the rhetoric about standing up for ordinary people against the corrupt establishment.
Re: The Dodd-Frank Dilemma
Donald Trump has used his right under the Congressional Review Act, to annul recent legislation passed in Congress, in this case the Cardin-Lugar Provision which is an amendment to the Dodd_Frank laws, and was passed by Congress in 2010 and implemented in 2016. The provision
...requires that oil, gas and mining companies listed on U.S. stock exchanges (whether or not U.S.-based) disclose their royalties and other payments to foreign governments.
http://thehill.com/blogs/congress-bl...nti-corruption
Trump is arguing that this reversal will enable companies to invest without the obstructive rules imposed by Cardin-Lugar, and that as a consequence “The energy jobs are coming back. Lots of people going back to work now.” Trump has not explained how a US firm investing in say, Brazil is going to create jobs in the USA, but it might help with the contract if any agreements with payments attached are buried in obscure language in the Annual Report.
The measure has been criticised by those groups who supported Cardin-Lugar precisely because it supported the transparency initiatives demanded by both shareholders and citizens of states where extractive industry earns billions a year that 'the people' never see -one thinks of oil-rich Venezuela, Angola, Mexico and Nigeria where 'the people' are mired in poverty and Brazil where the state owned oil company Petrobras is at the core of corruption investigations involving politicians as well as as oil company executives.
And the claim that Cardin-Lugar added a cost burden to companies is rubbished in the first link below.
Maybe businessmen know best how to run a business, and maybe 'the people' should be at the heart of the decision making-but not ask awkward questions-, but when there is an opportunity to make $50m at the stroke of a pen, 'the people' are conspicuous by their absence, and not usually invited to join moneybags on his yacht for a spin around the cape.
http://www.pwypusa.org/wp-content/up...ion-2017-1.pdf
Re: The Dodd-Frank Dilemma
I call bullshit. Only Congress or SCOTUS can negate an Act of Congress. There's no law giving POTUS that power, & there won't be.
Re: The Dodd-Frank Dilemma
Quote:
Originally Posted by
hippifried
I call bullshit. Only Congress or SCOTUS can negate an Act of Congress. There's no law giving POTUS that power, & there won't be.
The point is that it is not an Act of Congress that it is being repealed, but a provision within an Act, in this case the Cardin-Lugar provision, and also because in terms of its timing, the Provision was only recently implemented and thus falls within the time-frame in which such Provisions can be changed or annulled as the case may be. My guess is that for wider changes to Dodd-Frank Trump will seek Congressional approval, or the new law will be proposed in Congress, though so far I don't know what new legislation Trump has sent to Congress as he seems to be using Executive Orders for most of his decision-making.
https://en.wikipedia.org/wiki/Congressional_Review_Act
Re: The Dodd-Frank Dilemma
The House voted to repeal Dodd -Frank on June 8th , now what? Back to the free for all 'Wild West' in finance and on Wall Street.
http://www.latimes.com/business/la-f...608-story.html
Re: The Dodd-Frank Dilemma
There's one that snuck in under the radar while the UK was convulsed by the election and DC with the Senate Committee hearings...but another example of the politics of revenge, to reverse everything that was passed by the Obama Admin, with Cuba on the agenda this coming week.
Re: The Dodd-Frank Dilemma
The Republicans claim the new bill makes our banks more competitive while Democrats claim it makes our financial system more unstable. The latter claim is more likely to be true. Repeal of the Volcker Rule, a key part of Dodd Frank, which places a limit on banks trading on their own account, will unquestionably increase the risk of bank insolvency. Repeal of the Labor regulation which requires investment advisors to consider the interests of their clients when providing investment advice has no purpose at all except to allow investment advisors to profit from dishonesty. The new bill also loosens consumer protections, which will make people more susceptible to predatory lending and ultimately bankruptcy.
The Dodd Frank bill was written as a retrospective attempt to understand the causes of the 2008 crisis and reduce the risks of the same catastrophe. It is true that there is an inverse relationship between liquidity and stablility and that some balance between these two countervailing goals is necessary. But the Republican's bill does not come in the wake of financial sector stagnation. There is no indication that Dodd Frank has prevented people from getting loans and further the repeals are not directed at improving liquidity. They are more geared to removing accountability and allowing excessive risk taking by insured institutions, something known in insurance markets as moral hazard.