By David John Schmidt
Recently, President Trump signed two orders that deal with the financial business industry. The first of the two is assembling a review of the Dodd and Frank financial industry regulations. Likewise, the other directive is a stoppage of the requirement that financial advisors must do what is in the best interest for their clienteles. Furthermore, during a meeting with numerous small businesses, Trump stated, “Dodd-Frank is a disaster, we’re going to be doing a big number on Dodd-Frank” (NPR). Thus, many feel that these are the start of the Trump administration’s move to revise or throw out the gains made by Obama’s administration.
However, a Trump administration official has voiced that the directives will not automatically dispose of the current regulations, but will set aside time for the treasury secretary to meet and discuss with the affected agencies on potential alterations that could be made in a timely manner. Likewise, National Economic Council director, Gary Cohn, was quoted by the Wall Street Journal stating the following “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 … billions of dollars of regulatory costs …”. Furthermore, Cohn believes by doing so, the banking industry will be able to price their products more resourcefully and will allow their customers the best choice.
Yet, the Trump administration is getting criticized by one of the Wall Street watch dog’s, Better Market’s President, who made a statement that in effect stated that Trump has deceived his supporters because he promised that he would protect them from the big guy “banks” whereas he is now supposedly helping the big guys. However, the Trump administration’s defense to this announcement is that they believe that the new agencies created while Obama was in office are unconstitutional. The main agency being the Consumer Financial Protection Bureau.
Furthermore, the second executive order is to inform the Department of Labor to defer the implementation of a rule known as the Fiduciary Rule, which in summary requires financial advisors to act in the best interest of the customer that they are working with in retirement preparation. Moreover, some of the arguments for and against the rule are that the rule will make it harder for financial advisors to assist lower-income clients, and yet on the other side, they state that it will prevent advisors from selling their clients products that are high-fee and inapt to the client.