President Donald Trump announced last week that he would begin to dismantle financial regulations that were put into law after the economic collapse of 2008-2009, including the Dodd-Frank Act.
“We expect to be cutting a lot out of Dodd-Frank,” Trump said in a press briefing Feb. 3. “I have so many people, friends of mine, with nice businesses, they can’t borrow money, because the banks just won’t let them borrow because of the rules and regulations and Dodd-Frank.”
Later that day, the president signed an executive order that sets in motion his plan to scale back the provisions of Dodd-Frank and repeal the upcoming fiduciary rule.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 to promote financial stability through better accountability and transparency in the financial market.
It created more stringent rules regarding bank capitalization, increased compliance and reporting standards for banks, introduced stricter mortgage requirements, and created the Financial Stability Oversight Council. It also put an end to bailouts, and promised to protect consumers from predatory financial services practices.
“The Dodd-Frank Act is a disastrous policy that’s hindering our markets, reducing the availability of credit, and crippling our economy’s ability to grow and create jobs,” said Press Secretary Sean Spicer at a press conference Feb. 3.
“It imposed hundreds of new regulations on financial institutions while establishing unaccountable and unconstitutional new agency that does not adequately protect consumers. Perhaps worst of all, despite all of its overreaching, Dodd-Frank did not address the causes of the financial crisis, something we all know must be done. It did not solve the “too big to fail,” and we must determine conclusively that the failure of a large bank will never again leave taxpayers on the hook.”
Rolling back Dodd-Frank was one of Trump’s promises on the campaign trail, and one that many in the real estate industry said would be a positive aspect of a Trump presidency.
“When you start reading his tax plan and repeal of Dodd-Frank, that all might be very good for New York,” said Leslie Himmel of Himmel + Meringoff, at a REBNY luncheon in November, just a couple days after the election. “Let’s see who he puts in the cabinet and listens to. Time will tell.”
According to the order, before the law can be changed, the Treasury Secretary has to meet with the various agencies, such as the Securities and Exchange Commission, that oversee and implement Dodd-Frank regulations, in order to find areas to be amended. That review is expected to be complete in 120 days. However, Trump’s Treasury Secretary nominee, Steve Mnuchin, has not yet been confirmed.
“The infrastructure investment, tax cuts, are generally neutral or positive to real estate, so once there’s a little bit more clarity on policy, there’s things coming out in little pieces every day — dismantling Dodd-Frank and regulations, and especially with Wall Street — at least in the near term, what we know, is probably not a net negative,” real estate appraiser Jonathan Miller told Real Estate Weekly just after the election.
“I’m actually pretty optimistic,” said Related’s Jeff Blau at an NYU Schack conference in late November. “Donald, Mr. President-elect, he wants to be a winner more than anything else. He wants to be successful. I think if you would ask him his definition of success, it’s really about creating economic development and jobs. If we just focus on that and not the rhetoric, I think it could be an incredible opportunity for this country because I don’t think that would be the answer if you asked many of our previous presidents what their definition of success is.”
“And so, if you just purely look at this from a business perspective, I think the country may be in for some good times.”