Trump Nears 100 Days in Office, Signs Memos to Review Bank Oversight

The first one hundred days of a president’s term in office are typically a reflection point on the early efficacy of our nation’s top executive. One of President Trump’s chief concerns entering office in January was Wall Street regulation and the Dodd-Frank Act. He vowed to dismantle Dodd-Frank, the 2010 legislation enacted soon after the mortgage crisis and Great Recession, throughout his campaign. With healthcare, border security and foreign affairs high on his agenda, Trump has mostly been mum on reforming banking and consumer finance laws.

However, on April 21st, he signed a pair of executive memorandums to review two provisions of Dodd-Frank, the Orderly Liquidation Authority and the Financial Stability Oversight Council.  

The Orderly Liquidation Authority (OLA) is an added level of protection in times of financial emergency that allows federal regulators to take measures to help stabilize failing banks. Trump’s memo described an environment where the OLA might encourage banks to take excessive risks and ordered the Secretary of the Treasury to undertake a full review of the policy and halt its use until completed. The banking sector is actually in favor of the OLA and may exert considerable pressure on the president to keep it in place.

The Financial Stability Oversight Council (FSOC) identifies and responds to risks in the financial system, particularly threats from non-bank financial companies. Trump’s second memo commands the Secretary of the Treasury to report on the transparency of the FSOC and the efficacy of its review process.

The Dodd-Frank Act has received considerable attention in recent weeks. The House Financial Services Committee will be holding a hearing on April 26th concerning a possible replacement, nicknamed CHOICE Act 2.0, for the sweeping Wall Street legislation. How this might affect the regulation of online lending remains unclear, but changes in the enforcement of federal laws are possible.