WASHINGTON--U.S. President Donald Trump on Friday ordered reviews of major banking rules that were put in place after the 2008 financial crisis, drawing fire from Democrats who said his order lacked substance and squarely aligned him with Wall Street bankers.
Though the order was short on specifics, financial markets embraced Trump's signal that looser banking regulation is coming and pushed bank stocks higher. The Dow Jones U.S. Banks stocks index closed up 2.6 percent.
At a White House forum on Friday with U.S. business leaders, including JPMorgan Chase's CEO Jamie Dimon, Trump said his administration expects "to be cutting a lot out of Dodd-Frank."
That will involve a lot more than issuing an order, said former Democratic congressman Barney Frank, co-author of the 2010 Dodd-Frank Wall Street reform law that raised capital requirements for banks, restricted their trading by means of the "Volcker Rule," and created the Consumer Financial Protection Bureau to guard against predatory lending.
Trump "can't make any substantial change in the financial reform bill without Congress," Frank told Reuters. "The language in the order doesn't do anything. It tells the secretary of the Treasury to give them something to read. The tone of it is to weaken the bill."
Trump and other critics of the Dodd-Frank law say its regulations have hindered lending. At the meeting with CEO's on Friday Trump said, "I have so many people, friends of mine, that have nice businesses that can't borrow money because the banks just won't let them borrow because of the rules and regulations in Dodd-Frank."
Despite such criticisms, recent data from the Federal Reserve Bank of St. Louis showed U.S. commercial-bank lending at a 70-year high, climbing steadily since late-2010.
Democratic Senator Elizabeth Warren who lobbied for the creation of the Consumer Financial Protection Bureau accused Trump of forsaking middle and lower-income individuals to help banks. "The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis - and they will not forget what happened today," she said in a statement.
Trump's adviser leading the deregulation effort, National Economic Council Director Gary Cohn, was previously a top official at Goldman Sachs. Billionaire investor Carl Icahn, meanwhile, is counseling Trump on regulation across the government.
