Will President Trump Repeal Dodd-Frank Too (Or, at Least, Try to)?

The financial market showed major losses on Wall Street, Tuesday, as big banks could not get anything out of President Donald Trump’ pledge to eliminate strict industry regulation.  Accordingly, the Standard & Poors Index fell 0.28 percent; the Dow Jones Industrial Average fell 0.12 percent; and the Nasdaq Composite fell about 0.4 percent.

You might recall that, on Tuesday, Trump said that he wants to either eliminate or to revamp the Dodd-Frank banking reform law. This law—enacted just after the financial crisis of 2008—began federal regulations that would require all financial institutions to prove their fiscal responsibility and future safegaurds before making any risky investments.

At a White House discussion with several CEOs, Trump said, “We’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many. For the bankers in the room, they’ll be very happy because we’re really doing a major streamlining and, perhaps, elimination, and replacing it with something else.”

To no big surprise, Donald Trump’s ability to work within the political system has been frequently called into question over the past few weeks. With trading down about 0.5 percent, on average, it certainly seems as though he does not have quite the grip he had promised. On the other hand, the numbers are still not as low as they had been in the past.

Big banks, however, are getting ready to start their first-quarter reporting period. This week, Citigroup, JPMorgan, and Wells Fargo will all report their performance over the past three months (up til March 31). Thursday is the final day before Wall Street closes for the three-day Easter weekend.

And hopes are high that this will set off another big growth period for S&P 500 companies.  Operating income should hit about 9 percent higher over the first quarter; if this is a period of growth, it would be the third such for the third straight quarter.

While reversing or amending the Dodd-Frank Act, might help to improve industry expectations in some ways, there is also a very good chance, however, it would greatly reduce the reach of the Consumer Financial Protection Bureau.  The bill would ostensibly, turn the CFPB into an agency of the Executive branch, which would have a removable director, limiting the agency’s powers with a budget controlled by Congress.

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