The Washington Post reported last month that Donald Trump and his administration have signaled they want to repeal and dismantle the Dodd- Frank Act of 2010. This act was a major piece of legislation passed during the Obama presidency, and is one of the largest reform acts ever to pass through congress. The act, which is over 800 pages long and added over 400 new regulations, was passed in response to the 2007/2008 financial crisis; and its intent was to regulate the financial sector as to protect consumers from irresponsible investing and ultimately another financial meltdown.
One of the major sections of the act, known as the “Volcker rule”, limits the the type of investments U.S. banks are allowed to make. This rule separated banks into two categories: savings and investment banks. Before the passage of this rule, banks could operate as both- and this was ultimately found to be one of the main reasons the financial crisis occurred. Another rule Trump is specifically targeting, the “fiduciary rule”, is meant to eliminate conflicts of interest between brokers and retirement plans, making it illegal brokers to sell stocks to retirement plans they receive commission from unless it is in the “best interest of the consumer”. Both these rules were put in place due to the impact they had in causing the financial crisis. Trump has targeted these rules, echoing Republicans calling it they “Obamacare of banks”.
The repeal of the Dodd-Frank Act has huge implications for the finance industry and the economy as a whole. I believe people operate in such a way as to to maximize their best self interest; and it is the job of the government to balance to best interests of the people and of industry. The repeal of this act will swing that balance away from the interests of the people and towards the interests of industry. This act was passed to protect people from another financial melt down, however Trump is targeting this act in order to allow the financial sector to chase after ever increasing profits while taking advantage of the people it’s meant to serve. The Great Recession ruined lives and destroyed livelihoods, while the big banks and financial firms were largely unscathed. I believe we need such regulations so that people cannot be taken advantage again, and to prevent another meltdown. The repeal of this act calls into question to the extend the government needs to regulate this industry; and whether corporations and banks will continue to operate in a way that protects the people, or will they return to their old, risky ways in order to obtain more profit? Only time will tell.