Trump signs memorandum on Dodd-Frank’s orderly liquidation authority

Housingwire:

Unlike a broader past executive order designed to roll back the Dodd-Frank Wall Street Reform Act, the landmark legislation passed in wake of the financial crisis, Friday’s executive memorandum focused on the orderly liquidation authority part of Dodd-Frank.

From the USA Today piece:

Direct the Treasury Secretary not to use orderly liquidation authority to bail out insolvent financial institutions, reigniting the debate over a key provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Critics have said that provision could actually allow banks to take more risks than they ordinarily would, and Trump wants to re-examine whether court-supervised bankruptcy would be a better way to wind down failing banks.

“It doesn’t sound like much, but it is,” Trump said on signing the directive. “That’s a biggie.”

Republican plan to abolish Dodd-Frank passes committee, full House vote coming

The Republican-crafted plan to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act is one step closer to reality after the House Financial Services Committee voted Tuesday to pass the Financial CHOICE Act.

The Financial CHOICE Act, introduced earlier this year by House Financial Services Committee Chairman Rep. Jeb Hensarling, R-TX, would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would end “too-big-to-fail bailouts, bring significant reforms to the Consumer Financial Protection Bureau, and provide some regulatory relief for certain financial institutions.

The bill passed out of the House Financial Services Committee Tuesday by a vote of 30-26 and will now move to a full vote in the House of Representatives.

An article on the subject from the Wall Street Journal suggests that the bill is “likely” to pass a full House vote but “isn’t likely to get traction” in the Senate.

Read on.

Congress set to consider Republican plan to abolish Dodd-Frank

House Financial Services Committee Chairman Rep. Jeb Hensarling, R-TX made wavesearlier this year when he announced a Republican-crafted plan to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act and replace it with a “pro-growth, pro-consumer” alternative.

Many of the tenets of the Republican plan, called the Financial CHOICE Act, were later echoed by the Republican Party’s national platform, adopted during its convention in July.

Included in the Financial CHOICE Act (“CHOICE” in this instance stands for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs”) is an end to “too-big-to-fail bailouts, dramatic reforms to the Consumer Financial Protection Bureau, and an overhaul of a financial regulatory system that is choking the country’s economic recovery.

Now, the Financial CHOICE Act is about take one step closer to becoming reality.

The Republican arm of the House Financial Services Committee announced Thursday that the Committee will begin meeting next week to discuss the Financial Choice Act.

Read on.

Clinton Says She’ll Move Beyond Dodd-Frank’s Bank Rules

Law360, New York (August 11, 2016, 3:51 PM ET) — Former Secretary of State Hillary Clinton on Thursday said that she intends to tighten financial regulations if she wins the presidential election in November even as she hopes to roll back red tape in order to spur lending by community banks and credit unions.

While Hillary Clinton’s speech focused on issues like taxes, international trade, reducing child care costs and boosting the power of labor unions, the former senator from New York also blasted Donald Trump for saying that he intended to roll back the reforms…

Source: Law360

Are Regulations Killing Our Economy?

The fourth of a six part series airing on the McCuistion Television Program, which has been focused on the 2008 financial crisis, “Have Dodd- Frank and Other Regulations Been Effective?” (watch it here), featured my  Bank Whistleblowers United colleague, William K. Black.

William, a white collar criminologist and former financial regulator as well as the author of The Best Way to Rob a Bank Is to Own One, was joined by: George A. Selgin, PhD: Director of the Cato Institutes’ Center for Monetary and Financial Alternatives, Professor Emeritus of Economics at the University of Georgia and C.K. Lee, a former bank regulator, now Managing Director,  Investment Banking, Commerce Street Capital. Jeb Hensarling (R- TX):Chair of the House Financial Services Committee gave his views via a prior taped interview.

The diverse comments were unanimously not in agreement. Yet each one believes to some extent that regulations and the way they are enforced have set up a tyranny in our financial system which favors the big banks at the expense of community banks which are crippled with the cost of regulations. As Representative Hensarling emphasized, Dodd-Frank and other regulations are imposing huge costs on banking because of their complexity and volume.

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Regards,

Richard

Richard M. Bowen III
richard@richardmbowen.com
www.richardmbowen.com/
214- 604-5492

Feds propose guidelines to replace expiring foreclosure relief efforts

Begun as the government’s response to the foreclosure crisis, the Treasury Department’s Home Affordable Modification Program wasn’t supposed to last forever.

The Dec. 31 end of the foreclosure relief program, which offered a more affordable payment by adjusting interest rates, extending the loan term, and reducing or forbearing principal, will leave a gap that the government is trying to fill.

The Consumer Financial Protection Bureau, created under the Dodd-Frank Act of 2010, is proposing consumer protection principles to guide mortgage servicers, investors, government housing agencies and policymakers as they develop foreclosure-relief solutions to replace what is better known by its acronym HAMP.

The Home Affordable Refinance Program, known as HARP, which was designed to help homeowners who’ve seen a drop in home values refinance with better mortgage terms, also expires Dec. 31.

Read on.

Wall Street Journal editorial lauds Republican plan to abolish Dodd-Frank

Hat tip to Housingwire:

Count the Wall Street Journal editorial board among the supporters of the Republican-crafted plan to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Republican plan, championed by House Financial Services Committee Chairman Rep. Jeb Hensarling, R-TX, would see Dodd-Frank replaced by the Financial CHOICE Act, which will “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”

In an editorial published on Sunday, the Wall Street Journal editorial board calls Hensarling’s plan a “promising idea” that would “promote economic growth and protect taxpayers.”

From the Wall Street Journal:

Don’t believe the shrieks that this is about “rolling back” financial reform to let the banks run wild. The financial system was heavily regulated before the 2008 panic; regulators failed to do their job (see Citigroup) and missed signals from the housing market, among other mistakes. The Dodd-Frank Act of 2010 doubled down on the same approach: Give even more power to regulators with the promise they’ll be smarter the next time.

History tells us that is a fantasy. Regulators will focus on solving the previous problem, while they miss where the excesses are really building. As Charles Kindleberger taught, the essence of a credit mania is that everyone follows everyone else and thinks it will never end. Regulators are no better than bankers.

The WSJ editorial states that Hensarling has a “better idea,” which involves opt out of some regulations in exchange for holding larger capital reserve.

Again, from the WSJ:

The Texas Congressman wants a simpler system in which private investors with money at risk decide which assets are safe. Under the Hensarling plan, banks can opt out of today’s complicated rules if they have capital equal to 10% of their assets. Their tally of assets has to include off-balance-sheet exposures. No more hiding toxic paper in conduits or structured-investment vehicles as Mr. Geithner allowed Citi to do before the financial crisis. And no more pretending that a financial instrument has no risk because a regulator says so.

Click here (or below) to read the full editorial from the WSJ, and for more on Hensarling’s plan, click here.

Source: The Wall Street Journal

5-minute take: How Trump and Clinton differ on policing Wall Street

Donald Trump’s financial regulation outlook

Trump has been vocal about his dislike of Dodd-Frank legislation.

“Trump is really influenced by the school of thought that says that Dodd-Frank is really big and really complicated and imposed so many rules and regulations on the economy that it’s gotten in the way of growth and it’s impeded lending to small businesses,” Goldsmith said. “He’s said that he’s going to all but eliminate Dodd Frank. It’s not clear what he’s going to replace it with.”

His call against breaking up the biggest banks and taxing “carried interest,” which largely benefits hedge fund managers, actually aligns with Clinton. However, he, unlike Clinton, has also proposed to significantly reduce taxes on the wealthiest Americans.

One of his more controversial proposals is to audit the Federal Reserve. Supporters of the Fed believe worry this threatens objectivity in monetary policy.

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The tension around Hillary Clinton’s financial regulation views

“Clinton as a candidate for president has been shaped by two powerful forces,” Goldsmith said. “First, she was a senator from New York for eight years. She defended voting for TARP in part because it helped her constituents in the banking industry. But second she faced a ferocious primary challenge from the left and largely on this issue. And so her plan reflects that tension.”

Clinton said she will extend Dodd-Frank to the “shadow banking” sector to include hedge funds, private equity funds, and insurance companies, which in many ways were also responsible for the 2008 crisis. She would institute a risk fee on the banks and would increase taxes on short-term trading, because she wants to encourage investing with a longer view and perspective.

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Read on.

Republican Policy Proposals: Wall Street Regulation Plan Released By Texas Rep Would Change How Washington Works

On a  side note: Volcker rule never went into effect yet due to the bank lobbyists pushing Congress to stall at rule to take into effect.

Hoping to find a way to show American voters the Republican Party doesn’t just represent stalled legislation and gridlock, members of the GOP in Washington have recently rolling out extensive policy proposals to reform the way taxes and — most recently — banks on Wall Street are handled.

Republican Rep. Jeb Hensarling of Texas, the chairman of the House Financial Services Committee, plans on unveiling a series of reforms to the country’s financial regulatory palate in the coming week, including what would effectively be a gutting of the Dodd-Frank Wall Street reform measure instituted in the wake of the 2008 financial crisis. Hensarling doesn’t want to change all of the bill — which has been cheered by members on the opposite side of the aisle, including Hillary Clinton — just “89.7 percent,” he says .

Among the reforms House Republicans like Hensarling are pushing are reduced independence for the Consumer Finance Protection Bureau (funding would come from Congress rather than directly from the Federal Reserve) and taking away the bureau’s ability to prohibit arbitration clauses in financial contracts. Hensarling would also like parts of the Fed — particularly the area that regulates financial institutions — to be under congressional budgetary oversight, the Economist reported.

Hensarling would like to repeal the so-called Volcker rule that bars banks and investment firms from trading on their own account. He would also like to replace government regulations on traders with hefty capital requirements (say, 10 percent of funding coming from equity from the firms themselves). Big banks would no longer be able to be bailed out by the government under his plans, either.

Read on.

Inside the foundation-shattering Republican plan to abolish Dodd-Frank

Includes ending ‘too big to fail’, dramatic overhaul of CFPB

If House Financial Services Committee Chairman Rep. Jeb Hensarling, R-TX, has his way, Tuesday, June 7, 2016 will soon be remembered as the day that the death clock started on the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Just as he recently promised, Hensarling on Tuesday revealed the Republican-crafted plan to repeal Dodd-Frank and replace it with a “pro-growth, pro-consumer” alternative.

n a speech given at the Economic Club of New York, Hensarling revealed the Republican plan, entitled the Financial CHOICE Act. “CHOICE” in this instance stands for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.”

When Hensarling first spoke of the Republicans’ plan to overhaul Dodd-Frank, he laid out a series of principals that would fundamentally change the way that the country’s financial system operates, and the specifics of the plan don’t disappoint in that regard.

“We remain stuck in the slowest and weakest economic recovery in our history. Last quarter’s pathetic GDP growth of less than 1% merely punctuates the point,” Hensarling said in his speech Tuesday.

“The economy isn’t working for tens of millions of working Americans who cannot get ahead and fear for the future of their families. Their paychecks remain stagnant; their savings have declined,” he continued.

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Per an executive summary of the Financial CHOICE Act provided by the House Financial Services Committee, those sections are:

1. Provide for election to be a strongly capitalized, well-managed financial institution

2. End “too big to fail” and bank bailouts

3. Empower Americans to achieve financial independence by fundamentally reforming the CFPB and protecting investors

4. Demand accountability from financial regulators and devolve power away from Washington

5. Demand accountability from Wall Street through enhanced penalties for fraud and deception

6. Unleash opportunities for small businesses, innovators, and job creators by facilitating capital formation

7. Provide regulatory relief for Main Street and community financial institutions

Read on.