President Donald Trump prepared Friday to sign executive orders that would open the door for Congress to slash regulations imposed on the banking industry in the wake of the 2008 financial crisis. Front and center is the Dodd-Frank Wall Street Reform and Consumer Protection Act, which critics say has done more harm than good.
White House Economic Council Director Gary Cohn told reporters that Trump’s order would unleash the kind of economic growth that was stymied by the Obama administration.
“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” said Cohn.
President Trump campaigned on a promise to slash Obama-era regulations, and this is among the first steps toward doing just that. His administration believes that policies put in place after the housing crash did little to protect consumers. Instead, they argue, the regulations merely made it harder for Americans to access credit and closed off opportunities for investment.
“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” Cohn said in an interview with the Wall Street Journal.
In addition to the Dodd-Frank regulations, the Trump administration is also taking aim at a rule that requires retirement investors to adhere to fiduciary standards when recommending opportunities for clients. While the law was supposedly meant to clear out conflicts of interest, critics say it merely saddled customers with low-fee investments that hindered the potential for profit on both sides of the desk.
Republicans have wanted to see this kind of re-regulation for years, so it’s no surprise to see Trump take action early on. At the same time, they will undoubtedly be met with forceful opposition from Democrats, who will paint this as a path back to recession.
Fact is, though, the free market economy works best when there is as little hand-holding as possible. Yes, that involves risk, but we’re otherwise talking about a planned, managed economy that can never match the strength of true capitalism. Trump’s orders won’t automatically send the GDP skyrocketing to 4%, but they will remove some of the chief barriers making that kind of growth impossible.