Will the Trump administration repeal Dodd-Frank?

It seems so, based on the nature of the transition team, the stock market reaction to Trump’s election, what the Trump web site says they will do, and what they have the power to do.

Here is my recent piece on rethinking Dodd-Frank, which I think has been less than a success for the most part.  Here were my original comments on Dodd-Frank, piece by piece, which I think were mostly on the mark.  But overall Dodd-Frank ended up harming mortgage lending, and thus residential investment, more than I had been expecting.  Here is my earlier post “Is the Fed our savior in financial regulation?”  Overall, most of the gains from Dodd-Frank can be kept through adequate capital standards, and so there is a potential win from modifying the status quo.  I would stress the simple point that most people who favor (or oppose) Dodd-Frank could not explain what the bill actually does, but they simply choose their positions based on how anti-finance they think they should be.  That is a mistake.

I do plan to give you ongoing reports on economic policy changes as I see them developing.


Wait for a few European banks to fail or need assistance and then look at the popularity or wisdom of repealing Dodd Frank.

I think the theme for the first 100 days will be "Addition by Subtraction".

Your assumption is that subtracting adds to total welfare.

What if you are wrong.

Then we continue as we've been going for the past 8 (16, 24?) years.


Were you around in 2008?

TMC, Get professional help for your memory problem.

What if you are wrong?

I predict that all the talk about secular stagnation will essentially be proven to be fluffy pieces of Obama hagiography, an attempt to put lipstick on the pig of economy and political economy that characterized those years.

If you had said that in 2007 would you have been right or wrong in 2008.

The growth rate of per capita income average about 2.36% from 1947 to 1970, about 2.06% from 1970 to 1991, about 1.58% from 1991 to 2009, and about 1.31% since 2009. Not sure what to make of that.

Angus Maddison estimates growth of production per capita at a mean of 1.68% over the period running from 1892 to 1929.

I understood that the power of legislation does not reside in the Prez.

So Frodd-Dank isn't in his hands, but in the oh-so-safe hands of Congress.

... then you misunderstand Presidential Executive Orders, all the regulatory agencies under the President, and the US Supreme Court.

The Obama Democrats have vigorously consolidated Federal power in the Executive Branch in face of a passive Congress and Supreme Court, and cheering media. Now quite ironically, that dominant Presidential power will implement Trump's agenda, not Hillary's. Karma

The man didn't say 'undo' but "repeal".

... semantics are so important in realpolitik (not).

America fought/fights dozens of wars since 1945... with exactly zero formal legislative Declarations of War, as strictly required by fundamental U.S. law.
Presidents do what they want to the extent they can get away with it, which is usually quite a bit.
Legal words and interpretations are so conveniently flexible to those with real power.

Dodd-Frank itself is outrageously illegal (non-constitutional), but such legal details and attention to word meanings mattered not. Dodd-Frank will quickly be de facto neutered by Trump and then be repealed way down the road, as a token formality.

Didn't the 2003 Iraq war get formally declared? If not why was everyone ragging on Clinton for voting for it?

In an o-so-interesting twist that I am sure the media will, somehow, miss. It is very likely that the Trump presidency will be invested with tremendous powers due to the previous imperial presidency and yet, he will likely use little to none of that power. He will, likely be an executitive that fulfills the will of the elected legislative branch, as opposed to a would be tyrant.

How likely is it that this story will be told? Haha, I kid. The story will not even cross the minds of the members of the abhorrent media.

Even further than that, Donald Trump rolling back Obama's undemocratic Executive Orders will be cast as acts of idiocy and meanness.

Basically hate crimes.

Great point!

Our media, the worst people in the world.

To be fair they are only a little worse than ISIS.

"most people who favor (or oppose) Dodd-Frank could not explain what the bill actually does, but they simply choose their positions based on how anti-finance they think they should be"

I'm curious if Prof. Cowen, or anyone else, thinks there is an issue where most people who talk about the issue DO know what they're talking about.

Of course there isn't, but this kind of selective condescension is one of Tyler's most potent rhetorical weapons, you can't expect him to just stop using it

Think, if Congress stops telling the Fed/FDIC that it needs to run bank stress tests / resolution plans do you REALLY think the Fed/FDIC are going to stop requiring the banks to do this on its own accord?

Punitive stress test assumptions + Basel requirements would be enough to discourage prop trading even if Volcker is rolled back.

So Dodd-Frank is superfluous... Sounds like a good reason to eliminate it to me.

Well, of course, all we need to do is provide the market with this information and it will correct itself.

Who said that?

Was that Alan Greenspan?

Dodd-Frank kick-started the regulators in a direction but at this point they could maintain the level of oversight without congressional dictate. And on Volcker, you had a second regulatory regime ramping up at the same time Basel. Me thinks the financially illiterate put too much weight on Dodd-Frank and not enough weight on Basel as to why the banks are now behaving differently.

Try turning a profit - in excess of your hurdle rate - on a 1250% RWA asset.

America's so-called democracy's mask has fallen. A desperate and impoverished populace has rebelled against the policies of mallefactors of great wealth who have imposed a free trade regime that favors them and no one else.
"Stand up, all victims of oppression
For the tyrants fear your might
Don't cling so hard to your possessions
For you have nothing if you have no rights"
I say, arise, arise!

What are you talking about

Powerful moneyed interests have forced destructive trade policies down the troats of the AMerican people. No more! This far, not further!

"America’s so-called democracy’s mask has fallen. A desperate and impoverished populace has rebelled against "

We had an election not a rebellion. One side won and the other lost. That's how democracy works in the Real World.

And yet it is clear the Deplorables (Copyright Clinton) rose against Wall Street and a bought political elite they feel doesn't epresent them. They have risen against their masters and seem to intend to throw out off the bankers' yoke and prevent the moneyed interests from crucifying America "upon a cross of gold." Can they succeed or is it all lost already?

To quote the The Who..."Meet the New Boss...Same as the old Boss."

If the Trump voters supporting him to clean up Wall Street, then they were fuckin' stupid. It ain't happening.

Maybe, but they are not going to sit on their a** as the events that affect them unfold to determine the course of their lives. They're going to take a stand. They're going to defend it. Right or wrong, They're going to defend it

"And yet it is clear the Deplorables (Copyright Clinton) rose against Wall Street .."

What kind of La La land are you guys living in? Trump promised to repeal Dodd-Frank and that he wouldn't have the government break up the big banks. He also said he'd tax the hedge fund guys.

Trump supporters never rose against Wall Street. They rose against Democrat control of the Presidency.

'": The brunette babe flashes her boobs while changing her underwear on live TV"
They could have chosen any other Republican. And if just trowing the Democrats off the White House were a popular cause, Obama wouldn't have been pesident for 8 years. But Clinton's ties with Wall Street's malefactors of great wealth was her undoing. America has risen against economic oppresion.

As long as they are told it is too complicated for them to uderstand, no doubt theTrump core supporters will be excited to know that one of his highest priorities will be policies that caused my bank stocks to go up nearlly 10% in three days.

I enjoyed that, also.

I noticed that also. I'm trying to understand the mechanism. The rise may be driven by regulation assumptions, but I wonder how much is based on hopes for higher long term rates/inflation?

But overall Dodd-Frank ended up harming mortgage lending, and thus residential investment, more than I had been expecting.

The impact repealing D-F will hardly be felt and not matter much and no the local banks ain't coming either. REPEAT AFTER ME...The primary reason for the continued slow mortgage lending and residual investment, is because the consumers, the Middle American Family has not had wage increases due to labor markets until 2015. (I believe the amount of mortgage debt hit was 2013)And this is especially true for young people under 30 who are not financial stable enough to buy a house and start families. (Also student debt ain't helping)

Mortgage lending is not a supply problem here. And do you want too much supply here?? Mortgage debt is an AD problem.

Clearly you haven't tried to get a mortgage anytime recently.

No I actually get a mortgage in 2013 below the 20% downpayment. It was not tough at all.

New rules went into effect in fall 2014.

Excuse me, fall 2015.

I'm in agreement with collin here and against Professor Cowen. I read Calculated Risk by Bill McBride every day and he has done the best job of covering the housing market from the bubble origins to now. If one looks at what 'rational' mortgage loan standards ought to be then there has been little difference other than the elimination of all the junk underwriting. Look at the data, it's available.

Well, for example, it's become much tougher to have overlapping mortgages or bridge loans. Building a house is a pain in the neck.

That has lead to real problems in less liquid parts of the market, like the high end.

"young people under 30 who are not financial stable enough to buy a house and start families."

Financial stable? How about mentally stable? Most young people are trying to decide whether they should get a dragon tattoo on their shoulder or an ankh symbol on the back of their neck. Or which particular cell phone contract will provide the fastest cat video downloads. There's always the possibility that the twenty-somethings aren't as obsessed with home ownership as their parents were, too. In fact, they might be counting on moving into the folks' place when mom and dad are sent to assisted living. Since families are much smaller than they once were, there are fewer arguments among heirs as to who will get the three-bedroom rambler. Additionally, the tattooed offspring don't want to live in the suburbia of their youth but can't really afford to buy an apartment building in the gentrified urban core where the action is. So they'll rent a faux loft while they work on becoming stable.

Dodd-Frank was (1) hideously complex, (2) written through lobbyist bull sessions in Barney Frank's office, (3) named after a pair of crooks who played a role in the degradation of finance, (4) fails to separate deposits-and-loans banking from the securities markets or the futures-and-options exchanges, (5) institutionalizes a patron-client relationship between big banks and politicians via discretionary decisions by regulators, (6) fails to break up Citigroup, (7) fails to liquidate Fannie Mae, Freddie Mac, Ginne Mae, the farm credit system, the federal government's miscellaneous loan portfolios, and (8) fails to put an end to subsidies to lending of all sorts. Can we please replace it with something better? How 'bout a blue ribbon commission to draft something, and put Paul Volcker, Yves Smith, and Luigi Zingales on it?

Ditto. It was full of gifts to special interests and never intended to 'fix' anything.

And crushed small and startup banks benefiting large banks.

Okay, so do you think it will be neutered through regulatory action, or do you think it will actually be repealed? The Trump Administration can't do the latter by itself. But if you are willing to say that you think something will occur, you should have some inkling of the mechanism.

What about mandatory disclosure and central clearing for over the counter derivatives? If we repeal Dodd-Frank, all of that is gone too. There are good arguments that central clearing in this context isn't a panacea, but it would appear that we need something, and Trump doesn't appear to proposing anything.

Yeah, what about mandatory disclosure and central clearing for OTC derivatives? Everyone who knows enough about that issue to comment intelligently, speak up!

Getting mixed up with swaps and derivatives is what sank AIG. Can we please leave trading in such exotica to actors other than deposits-and-loans institutions and insurance companies?

Looks like GS has increased market cap by over $8 billion since Trump won. And we were concerned about a $200K speech...

A wholesale repeal of Dodd-Frank (and its multitude of rules and regulations) is very unlikely. It's all very tentative right now, but I doubt that the CFPB and FSOC are in existential trouble, stress tests in one form or another are likely here to stay, and the Fed will likely maintain its status as head banking regulator, although of course it is due for a verbal lashing and blame for all financial problems from the Republicans.

As of now, reform appears to be centering around the Financial CHOICE Act. The basic proposal is what I would (tentatively!) expect to be implemented, in one form or another.


But isn't the easiest way to stop foreign remittances through the Consumer Financial Protection Bureau of Dodd Frank?

I will be really interesting to see how things go out with Trump at the helm, but we just need to be wise and careful with how we go about handling all these situations because there is really no other way. I like to keep it simple while trading and due to OctaFX broker, I am easily able to do it with low spreads, high leverages, bonuses and best part is their ECN account which is superb and helps big time.

Comments for this post are closed