In his first order, Trump will issue a broad directive meant to garner input from the heads of federal regulatory agencies on areas for reform. The move won’t make any immediate changes to the agencies or their policies; rather, it will solicit recommendations for changes to the Dodd-Frank Wall Street reform law that was enacted in 2010.“Everything is going to be looked at,” said a senior administration official, speaking anonymously to preview the order before it was signed.The official conceded a complete gutting of the law would require Congress to act — “This is not an attempt to undo Dodd-Frank” — but identified areas where Trump could make unilateral changes, like placing his own directors at key regulatory bodies.
Dodd-Frank is one of those well-intentioned laws that was passed after a crisis when lawmakers were under severe duress to “do something.” The result is an incredibly burdensome, expensive, and punitive regulatory structure that often prevents businesses from acting in the best interests of their stakeholders. It also bleeds money away from productive areas of the economy in order to feed the regulatory compliance industry.
But I appreciate the fact that President Trump is beginning with an effort to seek informed advice and the deference to Congress’ authority and responsibility to act.
And then there’s this:
A second action Friday will direct the Department of Labor to cease implementation of an Obama administration rule on retirement investment advisers, which is supposed to take effect in April.That measure, called the “Fiduciary Rule,” required retirement advisers to always act in their clients’ best interests. But the Trump administration official said the rule was a “complete mess” with a litany of unintended consequences.
This was another one of those land mines that President Obama planted for Trump. It was a sweeping regulation that Obama based in a 1974 law that was intentionally set to phase in after Obama left office. It sounds great on paper. After all, who wouldn’t like to “requires retirement advisers to always act in their clients’ best interests?” What it really did was impose an expensive regulation that would most likely have eaten into the investment returns of middle class investors.
So while the media will follow the Obama playbook and claim that Trump is stripping out regulations to help Wall Street, the reality is that this was an ill-conceived regulation that would have benefited the deep-pocket investors at the expense of the rest of us. This is an area where the regulations are in need of reform, but this was not the reform it needs.