Trump to sign executive order, memoranda on financial regulation at Treasury

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President Trump on Friday will sign one executive order and two presidential memoranda dealing with financial regulation and taxes at the Treasury Department, according to the White House.

All three documents will direct Treasury Secretary Steven Mnuchin to analyze key provisions of the Dodd-Frank financial reform law and the tax code, and report back on ways to improve them. CNBC first reported that Trump would sign two executive orders at the Treasury.

Trump promised to “dismantle” Dodd-Frank during his campaign and signed two executive orders in February instructing his Cabinet to look for economically beneficial reforms that could be made to the law. It’s unclear how the two memoranda to be signed Friday differ from previous orders.

{mosads}The executive order directs Mnuchin to review “significant” tax regulations issued in 2016 and determine if any are too costly, complex or outside of an agency’s authority. The White House and Republican lawmakers are eager to reform the country’s tax code for the first time in 30 years and are working on separate plans to do so, though only Congress can write and repeal taxes.

One memorandum directs Mnuchin to asses the Financial Stability Oversight Council’s (FSOC) process of designating banks and financial firms “too big to fail.” FSOC, a multiagency group established in Dodd-Frank, monitors financial risks and designates certain banks and financial firms as “systemically important financial institutions” (SIFIs). That label subjects banks to tougher federal oversight, and Republicans claim the designation is applied inconsistently and arbitrarily.  

The other memorandum would direct Mnuchin to review and report back on whether the federal government’s orderly liquidation authority (OLA) is useful or hurtful to the U.S. economy and in line with administration financial regulatory policy.

Established in Dodd-Frank, OLA is the process through which the federal government would help SIFIs sell off their assets without triggering an economic crisis. Though OLA is funded through fees paid by large banks and financial firms, Republicans call it a “bailout” for big banks and seek to replace it with a new bankruptcy process. Democrats typically support OLA as a safeguard against another financial crisis.

Trump’s orders come as House Republicans prepare major legislative overhauls to Dodd-Frank. The House Financial Services Committee is scheduled to hold a hearing on April 26 to consider Chairman Jeb Hensarling’s (R-Texas) sweeping rewrite of the post-recession financial regulation.

— Updated at 8:05 p.m.


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