Trump to water down Dodd-Frank regulations to lift 'burden' on banks

3rd Feb 2017 11:20

(ShareCast News) - Donald Trump is making tracks on his promise to cut business regulation, as reports suggest he is to sign an executive order on Friday which strips back the Dodd-Frank regulatory framework put in place following the 2008 financial crisis.In an interview with the Wall Street Journal, Trump's Economic Council director Gary Cohn, who is a former executive of Goldman Sachs, said that banks had been straddled with regulations for too long.The Dodd-Frank Wall Street Reform and Consumer Protection Act came into place in 2010 in order to prevent financial institutions from acting in an irresponsible manner, and avoid such global crises."Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year," Cohn told the WSJ.Trump had said during his election campaign that the Dodd-Frank reforms were unneccesarily strict, and have prevented job growth in the US.He told Reuters last May that it "has made it impossible for bankers to function."Many of the largest banks in the US had to be bailed out by the Federal Reserve in October 2008 following the subprime mortgage crisis, including Bank of America, Citigroup, JPMorgan and Wells Fargo.Banking stocks were trading higher ahead of the opening bell in the US, while British and European banks have also cheered to the President's executive order.In London, Royal Bank of Scotland was almost 2% higher, while Barclays is the top performer so far today, trading over 2.5% higher."UK bank stocks are higher across the board this morning, after the magic words 'Dodd-Frank' and 'repeal' flashed across screens last night," said IG analyst Chris Beauchamp. "Leaving aside the political implications, the news could provide a tonic for the sector, especially as the previous narrative, that of higher US rates, starts to lose its power to inspire."