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Trump Signs Executive Action To Roll Back Some Financial Regulations


President Donald Trump signed another executive order today, this one aimed at scaling back financial regulations under the Dodd-Frank Act. That law was passed after the financial crisis. It was meant to rein in risky behavior by banks and protect consumers. And the Obama administration saw the law as one of its signature achievements. NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: Today's action by President Trump provides a framework for Congress to begin overhauling Dodd-Frank. Before signing the order, Trump met with an advisory group of CEOs including banker Jamie Dimon of JPMorgan Chase.


PRESIDENT DONALD TRUMP: There's nobody better to tell me about Dodd-Frank than Jamie, so you're going to tell me about it. But we expect to be cutting a lot out of Dodd-Frank because frankly I have so many people, friends of mine, that have nice businesses that can't borrow money. They just can't get any money because the banks just won't let them borrow.

YDSTIE: That's a complaint the financial services industry has been making since Dodd-Frank took effect. The law requires banks to have more capital to absorb losses and to write living wills, roadmaps to help regulators wind them down if they fail. Dodd-Frank also enhanced regulation of derivatives like the mortgage-backed securities that brought down so many banks during the financial crisis. Michael Barr, a Treasury official in the Obama administration and one of the architects of Dodd-Frank, expressed deep concern about President Trump's actions.

MICHAEL BARR: I'm really worried that the attacks on Dodd-Frank will undermine financial stability, and all of us will end up paying if we have another financial crisis.

YDSTIE: At a White House briefing today, press secretary Sean Spicer signaled the administration is also taking aim at the Consumer Financial Protection Bureau. Spicer called the agency unconstitutional. In another executive action today, President Trump put a 180-day hold on an Obama administration rule several years in the making designed to protect retirement investors.

It requires financial advisors and brokers to have a fiduciary relationship with their clients. That simply means putting their client's best interests ahead of their own interest in making a profit. Wall Street has lobbied hard against the rule, saying it will limit investment opportunities for small investors because advisers fear running afoul of the rule. That concern was echoed today on CNBC by President Trump's top White House economic adviser Gary Cohn, formerly of Goldman Sachs.


GARY COHN: They thought they were trying to protect investors and their retirement accounts, but by protecting investors they highly limited their choices.

YDSTIE: But Barbara Roper, director of investor protections at the Consumer Federation of America, says there's plenty of evidence that's not true.

BARBARA ROPER: Large firms, smaller firms, advisers, brokers have all come forward and said that they will continue to serve this market under this rule.

YDSTIE: The rule was to take full effect in April, and financial firms have been adjusting their practices to comply. Trump's action sends the rule back to the Labor Department for review, where under his administration it may simply die. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.
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