Treasury releases first proposal to roll back DoddFrank
The Treasury Department proposed on Monday several changes to Obama-era banking regulations, the first specifics on how President Trump would try to “dismantle” the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Treasury’s proposal includes dozens of recommendations ranging from legislative fixes to be adapted by Congress to ways regulators could loosen rules on banks with the hopes of boosting economic growth.
“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy,” said Treasury Secretary Steven Mnuchin. “We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products — while ensuring taxpayer-funded bailouts are truly a thing of the past.”
The recommendations came in a report released by the Treasury Department on Monday evening, the first of four analyses mandated by orders Trump signed on April 21. The memoranda directed Mnuchin to review Dodd-Frank for changes that would boost economic growth.
Much of Monday’s report focuses on the frequency, scope and administration of federal bank stability exams. Under the Treasury’s proposal, banks with less than $50 billion in assets would be exempt from federal stress tests. That limit is $10 billion under Dodd-Frank. Mnuchin wrote that regulators would consider other potential measures of stability beyond those outlined in Dodd-Frank and stop making “unrealistically conservative” analyses about what banks could do under financial stress.
The report also recommends opening up the Federal Reserve’s role in stress-testing banks to public input and congressional review.
Mnuchin also proposed several changes to the “living wills” process, in which major banks are forced to submit plans to regulators on how they’d weather a financial crisis. The report recommends raising the living will compliance threshold from $50 billion in assets but doesn’t suggest a figure — the current focus of a heated debate in Congress.
The Federal Deposit Insurance Corporation would be removed from the living will process, which would only happen every two years under Mnuchin’s plan, not annually as under current law.