Bloomberg reports: Dodd-Frank’s Tentacles Go Deep. They Won’t Be Cut Fast or Easily. It took seven years to put these regulations in place. Is it rational to think they can be removed in less than 4? If not, then the financial's rally may be a tad bit premature and overdone.
There will be quite a bit fo time before financial institutions see relief from the repeal of Dodd Frank under Trump, Here's a quick rundown of the reasons why:
- Whether by Democrat's machinations or Trump's performance, this administration does not have the appointees running the agencies that oversee financial rules.
- New legislation have to be passed in order to ease the current legislation. That means all will have to get along and play nicely, and quickly. Two weeks into the presidency, the Democrats are playing scorched earth and the GOP questioning and questioning again, support for Trump in light of what many perceive to be missteps or even incompetence.
- Trump has purposely placed livefire lightning rods in the form of two former Goldman Sachs partners as the lead in the effort to repeal bank regulation in the same economic cycle that said bank assisted in tearing down the global economy. The further galvanizes a partisan congress, and even gives some GOP members reason for pause.
Obama era protections eyed for the Ax
At risk of removal are:
- Proprietary trading restrictions;
- Systemic financial institution designation
- Financial institution dismemberment upon insolvency (Big Banks To Tell U.S. Regulators How To Dismember Their Corpses).and...
- the Consumer Financial Protection Bureau.
Most importantly (at least to many potential subscribers to our advisory servers) Trump is Rolling Back Obama Legislation That requires financial institutions to put their clients interests above their own. This has a special place in my heart, for we have a long track record of countering the effects of Wall Street banks putting their bonus pool above the interests of their clients. This is not only germain to retail investors and mom and pops accounts. Institutions and UHNW get fleeced for more than anyone else.
Remember Wall Street Real Estate Funds Lose Between 61% to 98% for Their Investors as They Rake in Fees!
How about our friends at Goldman Sachs and Henry Paulson (Bush's Treasury secretary!) settle fraud lawsuit over Abacus investments (Goldman Sachs, Paulson settle fraud lawsuit over Abacus). The victim was a mortgage insurer, hardly an amateur investors. How about Goldman Sachs Agrees to $5 Billion Mortgage Settlement .. Or how about Deutsche Bank Agrees to Pay $7.2 Billion for Misleading Investors. I can go on, but I think you get the point. BoomBustBlog independent research and forensic advisory services are going to be in very high demand.
This liberalizing of Obama era rules is in direct contravention to the populist platform that Trump ran on (with a special part featuring Goldman Chief Executive Officer Lloyd Blankfein in an segment about corporate chieftains pocketing the wealth of American workers)...
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That was the spiel. Here's the reality...
If you haven't already, see Apple's 2017 1st Quarter Results as Viewed Outside the Reality Distortion Field for how Wall Street banks are already gearing up to get them bonuses.... Now, more than ever, the services of BoomBustBlog are needed by both individuals and institutions!
The Ex-Goldman team outlined above answer directly to Trump, and two of them, National Economic Council Director Gary Cohn and Treasury Secretary nominee Steven Mnuchin, will be the one's slated to dismantle the Dodd-Frank rules. Ohh!!! I can see how worker-centric that will turn out to be. This will likely hurt the small and medium institutions the most (dollar wise) for that's where the juiciest meat is. As quoted from the Bloomberg article:
On Friday, Trump vented that the law had made it difficult for his business friends to get loans, and boasted to a group of executives gathered at the White House that he was getting feedback on how to fix it from an ideal adviser: JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon.
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