The Politics of Finance: Trump vs. Clinton
Donald Trump
Financial reforms put in place by President Barack Obama have “made it impossible for bankers to function,” the Republican nominee said in a published report in May. The Dodd-Frank Act “makes it very hard for bankers to loan money,” he added, “… and that has to stop.”
Trump expressed his intent to “dismantle” the law, claiming the financial reforms were harming the economy, according to the report. “The Republican vision for American banking calls for establishing transparent, efficient markets where consumers can obtain loans they need, at reasonable rates based on market conditions,” reads the 2016 Republican Party platform statement. Congress used the crisis “as an excuse to establish unprecedented government control over the nation’s financial markets,” according to the platform statement. “The consequences have been bad for everyone except federal regulators.”
Enacted after the 2007-2009 financial crisis, the Wall Street Reform and Consumer Protection Act, required U.S. banks to reduce their reliance on debt for funding. The legislation created the Consumer Financial Protection Bureau, which was given authority over large nonbank financial companies to police lending, impose tougher regulations on financial derivatives, and grant the government power to liquidate teetering firms.
Trump plans to place a “temporary pause on new regulations” and review previous regulations “to see which need to be scrapped,” according to his campaign website. Trump will require federal agencies to prepare a list of regulations they impose and rank them from most to least critical, to which the least critical regulations will “receive priority consideration for repeal,” according to the site.
Trump himself has not proposed a plan for regulating the financial sector yet, but House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has introduced a proposal to replace Dodd-Frank with a Republican alternative to the financial reform law.
The legislation, known as the Financial CHOICE Act, would allow Congress to set the CFPB’s budget, and replace its single director, Richard Cordray, with a bipartisan commission. It would also repeal a provision allowing financial regulators to identify which large institutions, merit closer oversight. Another area for the financial industry to “watch” is the 2018 expiration of Cordray’s term, said Ryan Donovan, chief advocacy officer of Credit Union National Association (CUNA).
“The next president has the opportunity to nominate someone who will be the second director to the CFPB,” he told AFN. “For credit unions, this is really significant position because so much of the focus on the CFPB has been to right the wrongs of the last financial crisis.”
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