When President Trump vowed in January to do “a big number on Dodd-Frank,” the post-crisis law passed in 2010 to rein in Wall Street, it was possible to hope, however naïvely, that he would offer alternative bank reform. During the campaign, he denounced Wall Street for having “robbed our working class,” a reference to the jobs, wages, savings and home equity wiped out in the financial crash. In addition, both Mr. Trump and the Republican platform called for a modern version of Glass-Steagall, the law, repealed in 1999, that had separated staid commercial banking from risky investment banking.
Any remaining hope for continued reform, however, was squashed this week when Steven Mnuchin, the Treasury secretary and Goldman Sachs alumnus, presented the first of what are expected to be several reports that review regulations stemming from Dodd-Frank and recommend changes.
The review calls for weakening many of the law’s central provisions and offers no alternatives. The rollbacks include loosening restrictions on bank traders, easing up on annual stress tests of a bank’s ability to withstand financial shocks, and advising regulators to rethink capital levels that big banks find onerous but that should be higher to make sure banks can absorb losses without bailouts.
