Blog Article

Trump Orders a Review of Dodd-Frank & The DOL’s Fiduciary Rule

Feb 08, 2017

The first order directs the Treasury secretary and financial regulators to revise some of the rules that the Dodd-Frank Act of 2010 put into place. The far-reaching Dodd-Frank Act was created to overhaul the U.S. financial systems after the financial crisis of 2008. President Trump has ordered a review of ways to dismantle many of these rules and regulatory systems.

Armed with a pen and extra inkwells, President Trump had another busy week. He signed two Executive actions that will potentially have significant impact on the financial services industry.

The first order directs the Treasury secretary and financial regulators to revise some of the rules that the Dodd-Frank Act of 2010 put into place. The far-reaching Dodd-Frank Act was created to overhaul the U.S. financial systems after the financial crisis of 2008. President Trump has ordered a review of ways to dismantle many of these rules and regulatory systems. It’s anyone’s guess as to which regulations will be reviewed and revised, but during his campaign, President Trump spoke specifically about his dissatisfaction with regulations that limit banks’ ability to lend money to consumers and businesses.

The second action involves the Department of Labor’s (DOL’s) much-discussed fiduciary rule. As stated in earlier blog posts, the new fiduciary rule, unveiled by the DOL last spring, seeks to hold anyone who works with ERISA retirement accounts to a fiduciary standard as opposed to the suitability standard (this would extend the fiduciary standard to brokers; investment advisers are already held to the fiduciary standard). Trump and other detractors of the rule have stated that implementation will restrict consumer choice and lead to limited options and products available to investors.

The DOL, now under the leadership of a Trump-appointee, has been ordered to “prepare an updated economic and legal analysis” to determine whether the new fiduciary rule is likely to harm investors, disrupt the industry, or cause an increase in litigation and the price of advice. If the DOL concludes the regulation does hurt investors or firms, it could propose a rule “rescinding or revising” the regulation. Initial news reports had indicated that there would be a six-month delay or “pause” in the implementation date of the fiduciary rule (which is scheduled for April 10, 2017), but the final version does not include a specified delay. The review that President Trump has ordered could definitely result in not only a delay, but also changes to or a repeal of the rule.

After the review was announced, acting DOL Secretary Ed Hugler stated: “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.” A thorough and timely review of the rule may be challenging, however, as President Trump’s nominee for DOL Secretary, Andrew Puzder, has yet to be confirmed and his confirmation proceedings have been rescheduled several times already. With these new orders in place, it is likely that Puzder’s confirmation procedures will take on a renewed importance on both sides of the congressional aisles.

Stay tuned as the Dodd-Frank and DOL sagas continue!

Armed with a pen and extra inkwells, President Trump had another busy week. He signed two Executive actions that will potentially have significant impact on the financial services industry.The first order directs the Treasury secretary and financial regulators to revise some of the rules that the Dodd-Frank Act of 2010 put into place. The far-reaching Dodd-Frank Act was created to overhaul the U.S. financial systems after the financial crisis of 2008. President Trump has ordered a review of ways to dismantle many of these rules and regulatory systems. It’s anyone’s guess as to which regulations will be reviewed and revised, but during his campaign, President Trump spoke specifically about his dissatisfaction with regulations that limit banks’ ability to lend money to consumers and businesses.The second action involves the Department of Labor’s (DOL’s) much-discussed fiduciary rule. As stated in earlier blog posts, the new fiduciary rule, unveiled by the DOL last spring, seeks to hold anyone who works with ERISA retirement accounts to a fiduciary standard as opposed to the suitability standard (this would extend the fiduciary standard to brokers; investment advisers are already held to the fiduciary standard). Trump and other detractors of the rule have stated that implementation will restrict consumer choice and lead to limited options and products available to investors.The DOL, now under the leadership of a Trump-appointee, has been ordered to “prepare an updated economic and legal analysis” to determine whether the new fiduciary rule is likely to harm investors, disrupt the industry, or cause an increase in litigation and the price of advice. If the DOL concludes the regulation does hurt investors or firms, it could propose a rule “rescinding or revising” the regulation. Initial news reports had indicated that there would be a six-month delay or “pause” in the implementation date of the fiduciary rule (which is scheduled for April 10, 2017), but the final version does not include a specified delay. The review that President Trump has ordered could definitely result in not only a delay, but also changes to or a repeal of the rule.After the review was announced, acting DOL Secretary Ed Hugler stated: “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.” A thorough and timely review of the rule may be challenging, however, as President Trump’s nominee for DOL Secretary, Andrew Puzder, has yet to be confirmed and his confirmation proceedings have been rescheduled several times already. With these new orders in place, it is likely that Puzder’s confirmation procedures will take on a renewed importance on both sides of the congressional aisles.Stay tuned as the Dodd-Frank and DOL sagas continue!