Trump signs presidential memoranda to review Dodd-Frank

Trump signs presidential memoranda to review Dodd-Frank

Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system

On Friday, Donald Trump signed two presidential memorandums targeting elements of Dodd-Frank, legislation implemented in order to prevent a repeat of the 2008 financial crisis.

Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation aimed to tighten regulation of the US financial system, including supervision of US financial institutions.

Trump’s memorandums direct the Treasury Department to review Dodd-Frank’s Orderly Liquidation Authority (OLA) and the Financial Stability Oversight Council (FSOC)’s process for designating non-banks as systemically important financial institutions.

The memorandums follow Trump’s repeated campaign pledges to dismantle Dodd-Frank.

OLA outlines a simple process to efficiently liquidate a large, complex financial company that is near failure. The OLA memorandum calls for the Treasury to determine whether OLA is consistent with the core principles for regulating the United States financial system, whether it encourages excessive risk taking, whether a new chapter in the U.S. Bankruptcy Code maybe used in lieu of OLA, and whether invoking OLA will be at a cost to the general fund of the Treasury.

The second memorandum calls for a review into FSOC’s processes for designating non-banks as systemically important financial institutions (SIFIs). The president calls on the Treasury to examine whether these processes are sufficiently transparent and whether they provide entities with adequate due process.

Trump commented: “They’ve done, really, in many cases, the opposite of what they were supposed to. These regulations enshrine too big to fail and encourage risky behaviour.”

Steve Mnuchin, United States Secretary of the Treasury, reiterated this, adding that these reviews were being carried out “to make sure that this doesn’t encourage excess risk-taking, moral hazard and exposure to taxpayers.” He said: “President Trump is absolutely committed to make sure that taxpayers are not at risk for government bailouts of entities that are too big to fail.”

Mnuchin must report back with both reviews within 180 days.

Trump also signed an executive order calling for the simplification of tax systems.

Related Articles

Applying IFRS 16: Achieving compliance and still managing the day job

Regulation Applying IFRS 16: Achieving compliance and still managing the day job

5h Innervision | Sponsored
Modulr: Lack of accountancy automation can lead to data and security issues

Technology Modulr: Lack of accountancy automation can lead to data and security issues

13h Rebekah Tunstead
HMRC putting increasing pressure on accountants and lawyers

HMRC HMRC putting increasing pressure on accountants and lawyers

18h Emanuela Hawker, Reporter
How to keep hold of your qualified accountants

Career How to keep hold of your qualified accountants

2d Beth McLoughlin, Managing Editor
Brexit: There are positives for the accountancy industry

Brexit & Economy Brexit: There are positives for the accountancy industry

2d Nicky Goringe Larkin, Founder and managing director, Goringe Accountants
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

2d
Tech and Tax: How automation can improve efficiency

Technology Tech and Tax: How automation can improve efficiency

2d Tax Systems
Mission (almost) Impossible: Directing business in an uncertain era

Brexit & Economy Mission (almost) Impossible: Directing business in an uncertain era

2d Edward Starling, Partner, Wedlake Bell