During his campaign he accused Hillary of being in the pockets of Goldman Sachs – probably the biggest player in the American financial services industry – but then once he was elected he filled his team with people who are linked to the bank. One of them, Gary Cohn – a former president of the bank – is now director of Trump’s National Economic Council.
So what is Dodd-Frank?
Dodd-Frank was a huge bill passed by Obama as a response to the financial crash in 2008. And by huge, we mean huge… It’s 2,300 pages long.
It was designed to keep a closer watch on the banking sector to try and prevent any future collapses, but also to protect the economy if any more crises did happen.
It included creating a number of new government agencies which take responsibility for different areas of financial services. One, the Financial Stability Oversight Council, keeps track of huge financial services companies which could have a major impact on the economy if they collapsed – or are thought of as “too big to fail”.
This is exactly what happened with Lehman Brothers, which collapsed in 2008. When it collapsed, its money was so tied up with other companies all around the world, it basically took the global economy down with it.
Another of these new agencies is the Consumer Financial Protection Bureau (CFPB). The CFPB was designed to protect vulnerable consumers (AKA bank customers) from being taken for a ride by their banks or lenders.
Trump had this to say: “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 and they can’t borrow money … They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank. So we’ll be talking about that in terms of the banking industry.”
It basically all comes down to the age old argument about how much
and interference there should be in business.
While the people who back this kind of regulation say it might stop future crises and therefore make the economy more stable in the long run, its critics say that it puts such a massive burden on banks and business (think Donald Trump’s friends above) it actually holds the economy back in the first place.
So what happens now?
Crucially, all this executive order says is that it will force a review. That means they’ll look at the regulations, and decide whether or not it needs to change, but as it was a law passed by Congress, Congress will have to pass any alterations.
What the executive order is, basically, is a statement of intent. Donald Trump is wearing his anti-regulation views on his sleeve. He believes that if you cut the restrictions on businesses they’ll grow and that will help the economy in the long run, and that is always a good thing. No matter the risks. He is a businessman, after all.