President Trump has reiterated plans to make drastic changes to the 2010 Dodd-Frank Act, which was introduced after the financial crisis to make it more difficult for financial institutions to act so recklessly.
During his election campaign, Trump said that he hoped to abolish, or at least dramatically change, the Dodd Frank Act. According to the US President, this will encourage economic growth and create jobs in the country.
“The banks got so restricted,” Trump said on Tuesday. “We want strong regulation, but not regulations that make it impossible for banks to lend money to people that are going to create jobs.”
“We’re going to be coming out with some very strong – far beyond recommendations – we’re going to be doing things that are going to be very good for the banking industry so that the banks can loan money to people who need it,” said Trump.
“We’re going to do a very major haircut on Dodd-Frank. We want strong restrictions, we want strong regulation. But not regulation that makes it impossible for the banks to loan to people that are going to create jobs,” he added.
Jamie Dimon, chairman and chief executive of JP Morgan Chase (OTCMKTS:JFTTL) has supported the President’s views.
In his annual letter to shareholders Dimon wrote:
“We believe (and many studies show) that poorly conceived and uncoordinated regulations have damaged our economy, inhibiting growth and jobs –and this has hurt the average American.
“We are not looking to throw out the entirety of Dodd-Frank or other rules (many of which were not specifically prescribed in Dodd-Frank). It is, however, appropriate to open up the rulebook in the light of day and rework the rules and regulations that don’t work well or are unnecessary.”
Former Massachusetts Congressman Barney Frank said that only one provision in the more than 850-page law restricted lending.
“It’s one that says, ‘Please don’t lend money to poor people, you can’t lend money to poor people who can’t pay you back for their mortgages,” he told CNBC earlier this year.
“Literally, that restriction on irresponsible subprime mortgages is the only lending restriction.”