By Katalina M. Bianco
Comments on Republican Donald Trump’s presidential election win have been coming in fast and furious. Several banking and business organizations have congratulated Trump and expressed their willingness to work with his new administration and Congress to achieve shared goals for the nation. Senator Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee, also weighed in on the election as did Timothy Q. Karcher of Proskauer Rose LLP.
Platform on Dodd-Frank Act. As adopted in July 2016, the Republican party’s platform challenged the Dodd-Frank Act’s creation of the Consumer Financial Protection Bureau. Among other things, the platform asserted that the CFPB was "deliberately designed to be a rogue agency.” Moreover, addressing federal regulation in general, Donald Trump stated in his economic plan that, if elected, he would "issue a temporary moratorium on new agency regulations that are not compelled by Congress or public safety in order to give our American companies the certainty they need to reinvest in our community, get cash off of the sidelines, start hiring again, and expanding businesses. We will no longer regulate our companies and our jobs out of existence."
Karcher analysis. Against this backdrop, Karcher offered his analysis of the impact the new Trump administration likely will have on Dodd-Frank regulatory reforms:
"Clearly, Dodd Frank has led to higher regulatory and compliance costs for all banks, and the criticism is that Dodd-Frank actually stifled growth by making it harder for banks to lend money."
"I think large portions of Dodd-Frank are likely to face significant pressure and potential reform in a Trump administration. During his campaign, Trump vowed to stop new regulations on banks, and indicated that he believed the regulatory environment for banks was unduly stifling. It’s probably too early to tell how President Trump, and Congress, will implement the changes or what form they will take."
"While candidate Trump hinted that he would repeal Dodd-Frank, I think it is more likely that it will be remodeled rather than eradicated. One of the results of Dodd Frank was to consolidate rulemaking, enforcement, and regulatory authority over a number of different enumerated consumer protection laws (TILA, RESPA, FDCPA, etc.), which were previously governed by different agencies, and I think it makes sense to keep those laws under a single regulatory umbrella."
"Some argue that the financial industry has gotten used to the reforms. The CFPB has been in existence for more than 5 years, and the financial industry has spent billions adapting to the new rules. To sweep the new rules away in favor of the unknown probably does not make much sense. Moreover, the CFPB is likely facing some structural changes in light of the recent PHH decision, and those changes could complement some of the changes President Trump and the Republican legislators are looking for. Time will tell."
Brown statement. Senator Brown issued a statement following election results that will keep control of the Senate in Republican hands. Senator Mike Crapo (R-Idaho) is expected to be the new chairman of the committee.
"Senator Crapo and I have a history of working together to produce results on the Finance Committee. I look forward to bringing that experience to the Banking, Housing, and Urban Affairs Committee where I hope Senator Crapo and I can find common ground on reasonable, commonsense ideas.” Crapo backed Trump when he became the presumptive Republican nominee in May, but revoked his endorsement in October. At the end of that month, however, he unrevoked his endorsement and said he would vote for the Republican ticket.
"Americans who believe the system is rigged certainly don't want to see Wall Street write the rules," Brown continued. "We must continue fighting to preserve and strengthen Wall Street reforms that protect American families from being on the hook for another bailout.” The senator noted, "We cannot forget the full title of the Committee is Banking, Housing, and Urban Affairs. Both Presidential candidates proposed badly needed infrastructure investments that will help get Americans back to work, so infrastructure should be a top priority for the Committee next year. And I look forward to learning more about the President elect’s plans for revitalizing our cities."
Industry comments on election. American Bankers Association President and CEO Rob Nichols remarked, "We call on the administration and Congress to come together and work for the common good. We look forward to working with members of both parties on policy solutions that will allow banks to help accelerate economic growth, create jobs, better serve their local communities and help their customers and clients succeed."
The ABA expressed its eagerness to work with the Trump Administration to achieve a "vibrant and growing economy." In a letter to Trump, the ABA wrote that in order to ensure the success of American customers, client, and communities, the trade association proposed the following principles and policies that the new Administration should keep in mind: a growing economy in which all Americans can participate; a thriving housing market that provides stability and mobility; banking technologies that advance competition, convenience, and safety, such as fintech facilitation and cybersecurity requirements. New banking technologies have the potential to increase U.S. competitiveness, promote financial inclusion, and expand access to banking services that drive the economy, such as Fintech facilitation, cybersecurity requirements and data breach reductions, and market pricing for card services.
Mortgage Bankers Association President and CEO David Stevens stated, "Today our industry is operating in the safest and soundest lending environment ever designed." Noting the MBA’s desire to work with a new Trump administration to restore housing as a "lead economic driver," Stevens commented that "it is critical that President Trump focus on three main areas—ensuring an adequate supply of affordable housing, bringing first time homebuyers back into the housing market, and ensuring certainty in regulations."
U.S. Chamber President and CEO Thomas Donohue, acknowledged that "Americans have just lived through a bitter, personality-driven campaign that exposed some deep divisions in our country." Indicating that the Chamber and its members are ready to help the Trump administration accomplish the goal of growing the economy, creating jobs, and lifting incomes for all U.S. citizens, Donohue said, "The number one goal of the Chamber’s political program this cycle was to save the pro-business majority in the Senate. Yesterday voters agreed, and chose pro-business majorities in the Senate and the House to represent them in Washington."
Similarly, Financial Services Roundtable CEO Tim Pawlenty urged Trump and Congress to enact policies that "grow the economy, spur innovation, protect both consumers and taxpayers, add good-paying jobs, and help more Americans reach their financial goals."
The Consumer Bankers Association congratulated the new President-elect and committed to working for a five-person, bipartisan commission at the Consumer Financial Protection Bureau, policies to help banks innovate in the 21st century, and improving the regulatory environment so banks may continue to meet consumer needs. "With a new president-elect and changes to the House and Senate, government and industry leaders have a chance to find workable solutions on issues most important to consumers," said CBA President and CEO Richard Hunt. "This is especially true for banking issues, as a strong banking sector is critical to a strong economy."
According to Dennis Kelleher, President and CEO of Better Markets, the election "was a scream from tens of millions of hardworking Americans for elected officials and policymakers to prioritize their economic circumstances, hopes and dreams." Too many families are still feeling the effects of the 2008 financial crisis. According to a Federal Reserve Board survey, 50 percent of Americans do not have enough money to cover a $400 emergency. The election reflects a "profound loss of faith and trust in government and government officials." Kelleher expressed the trade association’s willingness to work with the incoming Trump Administration to ensure that a "strong and effective financial reform is preserved and protected to prevent another financial crisis."
For more information about the election's impact on banking, The Dodd-Frank Act, and the CFPB, subscribe to the Banking and Finance Law Daily.
