WASHINGTON (AP) — The Trump administration is proposing to curb the authority of the consumer finance watchdog created following the economic crisis as it drives toward easing restrictions on banks and financial institutions.
The U.S. Treasury Department issued Monday the first part of a review that was ordered by President Donald Trump in one of his earliest acts as president.
The report reviewing the Dodd-Frank financial oversight law also urges changes to rules for banks that were put in place under the 2010 law. The law aimed to restrain banks — which received hundreds of millions in taxpayer bailouts — from the kind of misconduct that many blamed for the crisis.
The law was enacted by President Barack Obama and Democrats in Congress to tighten regulation after the 2008-09 financial crisis that sparked the Great Recession that cost millions of Americans their jobs and homes.
Trump, however, has called Dodd-Frank a “disaster” that has crimped lending, hiring and the overall economy. He promised to do “a big number” on it.
“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth, and to create opportunities for all Americans to benefit from a stronger economy,” Treasury Secretary Steven Mnuchin said in a statement Monday.
The report outlines what it calls core principles of financial regulation — including overhauling the Consumer Financial Protection Bureau and having more “efficient” bank rules.
The CFPB oversees the practices of companies that provide financial products and services, from credit cards and payday loans to mortgages and debt collection. It has been a prime target of Republican lawmakers, who accuse it of regulatory overreach.
The new report urges Congress to remove the agency’s authority to supervise banks and financial companies, returning that power to other federal and state regulators, respectively. And it proposes enabling the president to remove the CFPB director at will without citing a cause for firing. That’s the subject of a battle now in federal court.
The CFPB’s structure and broad regulatory powers have led to “abuses and excesses,” and hindered consumer choice and access to credit, the report says.
The Treasury report comes a few days after the Republican-led House approved sweeping legislation to undo much of Dodd-Frank, repealing about 40 of its provisions. That was passed on a largely party-line vote of 233-186, but is unlikely to clear the Senate in its current form.
The administration’s report is narrower in scope and ambition than the House-passed legislation. It could provide a blueprint for regulators to rewrite the Dodd-Frank rules, as Trump continues to fill out his team of top financial overseers.
Mnuchin said in separate congressional testimony Monday that he expects to be able to work with the regulators on 70 to 80 percent of the proposed changes. But Congress would need to pass legislation to actually revamp the law — for example, to change the CFPB’s authority.
Among the banking rules, the new report focuses closely on the so-called Volcker Rule, established by Dodd-Frank to generally bar banks from trading for their own profit instead of for customers. The idea behind the rule was to prevent high-risk trading bets that could imperil federally insured deposits.