Speaker 1: The Trump administration has laid out its plan for overhauling
Speaker 1: banking rules, calling on the government to ease, though not eliminate,
Speaker 1: many of the restrictions that were imposed on Wall Street
Speaker 1: after the financial crisis. Joining us is Nathan Dean, government
Speaker 1: analysts for Bloomberg Intelligence. Nathan, what are some of the
Speaker 1: most important parts of the plan? So, I think the
Speaker 1: most important part of the plan is the recognition that
Speaker 1: Treasury knows that they can roll back dot frank via
Speaker 1: the regulatory process, and they highlight this report was only
Speaker 1: for the depository institutions, so it talked about things like
Speaker 1: capital requirements, the vocal rule. But what the report laid
Speaker 1: out was is that you know, we can gut or
Speaker 1: we can you know, tweak a lot of dot frank
Speaker 1: via the regulatory process, and we can do it without
Speaker 1: Congress's input. And so I think it's a great blueprint.
Speaker 1: It can show the path of dot frank. But you know,
Speaker 1: just just remember that it takes the financial regulators to
Speaker 1: actually implement this, and that's going to take a lot
Speaker 1: of time. So tell us some of the major rules
Speaker 1: that it's aim debt. So this report really put in
Speaker 1: great detail a lot about capital requirements and liquidity requirements.
Speaker 1: So uh, it called for the next stable funding ratio
Speaker 1: proposal to be indefinitely delayed. It changed called for changes
Speaker 1: to how the liquidity coverage ratio is put in place,
Speaker 1: all these big bank capital requirements. You know, in the
Speaker 1: United States, there's a lot of banks. There's eight banks
Speaker 1: that are considered g SIPs uh, and they have this
Speaker 1: additional g SIP surcharge. And so the Treasury reports said
Speaker 1: that we're going to ask the regulators to look into this. Now,
Speaker 1: we expect those rules to be tweaked over time. But
Speaker 1: you know what, one one thing the report didn't do
Speaker 1: is it just said didn't get it. Didn't say just
Speaker 1: get rid of the rules. And so this was a
Speaker 1: very measured and I think reasonable approach to how they're
Speaker 1: going to tackle dot frank. But again that the downside
Speaker 1: to the report is it's going to take years to
Speaker 1: implement all this. How is it different from the bill
Speaker 1: passed by the House Republicans last week? So the bill
Speaker 1: that was passed last week is the House Finitial This
Speaker 1: is the Financial Choice Act. It was the kitchen Sink bill. Uh.
Speaker 1: You know, this was the one that gut dot frank
Speaker 1: and so there are a lot of elements in here
Speaker 1: that the Democrats just won't go with, and that's why
Speaker 1: this bill is dead on arrival when it goes to
Speaker 1: the Senate. This report said, okay, fine, so we're gonna
Speaker 1: keep dot Frank as it is, but we're gonna look
Speaker 1: at the regulations that have been put in place under
Speaker 1: dot Frank, and we're gonna ask the regulatory agencies, which
Speaker 1: by mid two thousand eighteen are gonna be under Donald
Speaker 1: Trump's influence. We're gonna ask the regulators to look at
Speaker 1: these regulations and begin tweaking things to make it a
Speaker 1: little bit better. You know, a lot of the financial
Speaker 1: services industry has been coming out and saying, don't repeal
Speaker 1: dot Frank, just tweak it, make things a little bit better. Obviously,
Speaker 1: there are some big points in here where the banks
Speaker 1: just want to get rid of the rule, and that's
Speaker 1: where they would prefer. But this Treasury report essentially was
Speaker 1: something that both the big banks and the small banks like. Uh.
Speaker 1: And so it's it's something that I think the industry
Speaker 1: expects to happen. It's just gonna take a lot of time.
Speaker 1: Democrats who say that Dodd Frank is vital for Wall
Speaker 1: Street to be kept in check. Criticize the report, do
Speaker 1: they have a point? Well, you know there they criticize
Speaker 1: the report, and I think they're going to continue to
Speaker 1: criticize the report. But you know, about two thirds about
Speaker 1: this report, you know they can do without Congress's input.
Speaker 1: And so if i'm you know, we put out a
Speaker 1: note to our clients this morning saying that, you know,
Speaker 1: if we expect the Democrats to actually begin negotiating over
Speaker 1: dot Frank, maybe not this year, but maybe next year,
Speaker 1: because you know, if I'm at the Consumer Financial Protection
Speaker 1: Bureau and Richard Cordray leaves and Donald Trump puts his
Speaker 1: own person in place, they can do a lot of
Speaker 1: damage to the CFBB and there's nothing the Democrats can
Speaker 1: do to stop this. So, you know, this report could
Speaker 1: be an incentive for the Democrats to begin negotiations, you know.
Speaker 1: And Senator Mike Crepo is chairman of the Ranking or
Speaker 1: the chairman of the Senate Banking Committee, a Republican even
Speaker 1: just told Bloomberg News a couple of minutes ago that, uh,
Speaker 1: this is a great starting point, but they're gonna have
Speaker 1: their own legislation out sometime this fall. That's the legislation
Speaker 1: we're telling our clients to look at because the Democrats
Speaker 1: probably will start negotiating on it. You mentioned how long
Speaker 1: it's going to take. Let's go into that a little
Speaker 1: bit longer because there are scores of regulations that would
Speaker 1: have to be rewritten, and it's a long process not
Speaker 1: only to rewrite but also getting them approved. Talk about
Speaker 1: the process. Yeah, so there's really three things to point out.
Speaker 1: The first stuff that we expect from the regulators are
Speaker 1: changes to compliance. There's these things called no action letters,
Speaker 1: interpretive guidance more on the technical side. That's something the
Speaker 1: regulators can do fairly quickly. If you're a compliance officer,
Speaker 1: this is what you care about. The regulation still remains
Speaker 1: on the books. Next thing is changing the actual regulation.
Speaker 1: Regulators have to follow the Administrative Procedures Act. They have
Speaker 1: to put out a proposal, they have to have a
Speaker 1: common period, they have to have a cost benefit analysis.
Speaker 1: The quickest I've ever seen done is nine months. The
Speaker 1: third thing to put in play is that you know
Speaker 1: the Federal Reserve, and Janet Allen remains in at the
Speaker 1: FED until February of two thousand eighteen. The Federal Reserve
Speaker 1: is so much involved in a lot of these big
Speaker 1: bank rules. So if I'm at the Vocal rule, for example,
Speaker 1: and it's a five agency rule o CC, FED, fd A, C, SEC,
Speaker 1: c FDC, you really need the Fed on your side
Speaker 1: to you know, change the vocal rule. And if Janet
Speaker 1: Allen says no, uh, you know, it could be pushed
Speaker 1: out to mid two thousand eighteen. You have to with
Speaker 1: through the Administrative Procedures Act. It could be before the
Speaker 1: change regulation actually begins to impact the banks. Nathan about
Speaker 1: thirty seconds. How much pushback do you expect from consumer advocates? Well,
Speaker 1: I think the consumer advocates are going to continue to
Speaker 1: push back. Um, you know, this Treasury report is the
Speaker 1: long term game. So I think a lot of their
Speaker 1: focus is going to be on the Senate. You know,
Speaker 1: this Senate bill that's expected this fall. That's where a
Speaker 1: lot of the action is going to be. Because the
Speaker 1: quickest thing to do anything in terms of rolling back
Speaker 1: Dot Frank, it's an Act of Congress. So I would
Speaker 1: expect the consumer advocates to spend most of their time
Speaker 1: up on the hill and on the whole. How do
Speaker 1: you how do you view this this these rules favorable
Speaker 1: to banks? The report definitely is favorable to banks. I
Speaker 1: think this is something that they've been wanting for a while.
Speaker 1: It's the first time we've seen a policy statement that says,
Speaker 1: you know, we've heard from the banking industry. There's a
Speaker 1: lot of banks that provided input to this report. UH,
Speaker 1: and I think this is something that the banks have said,
Speaker 1: you know, this is the first time a policymaker has
Speaker 1: actually hurt our concerns. UH and somewhat agree with us.
Speaker 1: All Right, thank you for being on Bloomberg Law. That's
Speaker 1: Nathan Dean, government analyst for Bloomberg Intelligence.