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WASHINGTON: A second Trump White House would seek to sharply reduce the power of US financial regulators, according to a review of public documents and interviews with people allied with the former president.

In the wake of the worst economic crisis since the Great Depression, Congress dramatically expanded the US government’s oversight of the financial industry to prevent a repeat of the 2008 global banking meltdown.

Donald Trump would likely renew his efforts to scale back those reforms, if elected, as well as pare protections for small-scale investors and borrowers, and allow companies to raise money with less scrutiny, according to the interviews and proposals from groups positioned to influence a new conservative administration. Reuters spoke with, among others, about a dozen people who have provided advice or been consulted by Trump or his allies.

The Republican Party’s presumptive nominee has not announced a formal policy staff or released detailed positions on how he would regulate Wall Street, aside from short videos and snippets in campaign appearances.

But, the sources told Reuters, a constellation of experts and Trump allies are pitching regulatory rewrites, identifying potential staff and floating ideas on TV, in op-eds and directly to Trump at his Mar-a-Lago Club in Palm Beach, Florida.

Some of the ideas in Trump’s current policy orbit have long circulated in conservative economic conversation. They include curtailing the Dodd-Frank Act, a set of post-2008 financial crisis rules intended to reduce systemic risk. Another idea is to make it easier for private companies to raise capital – in turn opening access to less transparent and more difficult-to-trade private funds and securities.

More recent policy ideas include attacking environmental, social and governance (ESG) investments and disclosures, which help screen businesses based on socially conscious factors, or potential dramatic cuts to staff at regulators through a mechanism known as Schedule F, which would reclassify up to 50,000 civil servants across the government as easily-replaceable political appointees.

Karoline Leavitt, national press secretary for the Trump campaign, said Trump had success in peeling back regulations during his administration.

“President Trump’s pro-growth, deregulatory agenda ignited the greatest economy in history,” Leavitt said in an email to Reuters.

The Trump administration, with mixed success, worked to reverse a range of Obama-era rules, such as those that eased regulations for Wall Street banks or “fiduciary” rules for brokers.

Excluding the immediate effects of the coronavirus pandemic, official data show unemployment at its lowest since the 1960s under both Trump and Biden. Though pandemic and other distortions can make comparisons difficult, in inflation-adjusted terms the US economy grew more slowly in Trump’s first three years in office (8.1%) than under Biden (10.6%), according to Commerce Department data.

Michael Faulkender, a former Trump Treasury official, has called publicly for scrapping bank stress testing under the 2010 Dodd-Frank Act in favor of stronger capital requirements, saying that requiring banks to pass the same set of evaluations leaves the system open to collapse if they all run into the same problems at once.

He is now chief economist at the America First Policy Institute (AFPI), which was founded by former Trump officials. Asked about his policy positions, Faulkender pointed to his previous writing about ESG investing.

“As the academic literature has documented, ESG is too much in the eye of the beholder,” he told Reuters. “Therefore, it can and has been used to deviate from the fiduciary duty that money managers have to their clients, and it has distracted financial supervisors from the safety and soundness criteria that should be used in ensuring the ongoing strength of the US financial system.”

Robert Bowes, a former Trump appointee who has worked with the conservative Heritage Foundation, has called for the abolition of the Consumer Financial Protection Bureau – created by the Dodd-Frank Act to police the lending industry at the federal level – and referred to the Securities and Exchange Commission as an “unaccountable meddling shakedown agency” that “uses its regulation to target political enemies, to ram through woke and radical green agenda.”

In an email, Bowes told Reuters he was “very concerned about the disastrous bank regulation and economic policies by the Biden administration.”

Asked about that characterization and others about burdensome regulations, a Biden White House spokesperson said congressional Republicans have pushed to continue Trump-era policies by “gutting life-saving regulations and legalizing predatory business practices,” thereby increasing risks to the financial system and the economy.

It’s unclear what ideas Trump will take up, and what can become settled policy. But taken together, the ideas being promoted in conservative circles would overturn key aspects of current financial regulation.

The changes would reverse reforms ranging from investor protections to risk management by the biggest banks, Brian D. Feinstein, an expert on financial regulation at the University of Pennsylvania’s Wharton School, said of the policy proposals being floated for a second Trump administration.

“It would upend the US’s entire system of financial regulation,” he said.

Campaign spokeswoman Leavitt characterized Biden’s administration as engaging in a “massive push to increase burdensome regulations, especially on our energy and auto industries.”

The Biden administration has pushed regulations to spur the use of electric vehicles and renewable energy sources, in addition to seeking fair lending requirements, increased investor disclosures and bank capital hikes.

Trump has repeatedly said he wants much less regulation than now exists. A person who regularly speaks with him on economic matters said Trump would be “sure” to “go after all of this climate change stuff,” likely a nod to new corporate climate risk disclosure rules and ESG investments.

Feinstein, the Wharton professor, said that some of the proposed policies from Trump’s allies would need to go through Congress, such as limiting the Dodd-Frank Act, making their fortunes uncertain. That will depend on the outcome of November’s elections in the US Senate and House of Representatives. Currently, Democrats control the Senate and Republicans have a narrow House majority.

But agencies like the Securities and Exchange Commission, whose five-person bipartisan commission is appointed by the White House (usually one each year) and approved by the Senate, would have power to push through other proposals, such as those related to environmental reporting, Feinstein said.

And bureaucratic changes such as expanding the definition of political appointees through Schedule F could have a major effect on financial regulators by removing job protections for many career professionals, compelling them to pursue the president’s preferences rather than their own independent judgment, he added. The Biden administration has maneuvered to slow such a move by Trump should he return to office.


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