Next Monday the Trump Administration is launching the first ever Deregulation Day, highlighting the benefits of an America liberated from bureaucracy. As part of the festivities, the White House will be hosting an event showcasing the Administration’s strategy for regulatory reform going forward, with the promise of significantly increasing the pace of reform across the entire federal government.
This is welcome news to us at CEI. As my colleague Wayne Crews has pointed out, the current administration has been the least regulatory since President Reagan. According to Crews, Trump’s overall proposed rules are down 32 percent compared to the same time period under Obama, and Trump’s rate of issuing “significant” proposed rules (i.e., the most expensive ones) are down 77 percent. This represents a spectacular reduction in the kinds of regulation that stifle businesses, consumers, and entrepreneurs. But more can be done.
One particular area is banking and finance. Perhaps the most regulated industry of all, with upwards of 12 federal agencies, the financial sector is in desperate need of reform. The imposition of the 2010 Dodd-Frank Act has devastated thousands of small and medium sized banks across the country, while entrenching the problem of “too-big-to-fail” amongst the largest banks. Worst of all, the post-crisis legislation made no effort to rein in the government guarantees, such as the government sponsored enterprises Fannie Mae and Freddie Mac, that were leading causes of the crisis.
The new administration has certainly made some progress, however. One example is the Office of the Comptroller of the Currency’s intention to revise the Volcker Rule. The Volcker Rule was intended to prevent taxpayer bailouts from large banks, but it has done nothing of the sort. Earlier this month, CEI filed comments suggesting ways to revise the rule. We argued that the rule has failed to improve the safety and soundness of the financial system as it was intended, instead adding another layer of burdensome compliance measures to already struggling banks.
Another encouraging sign comes from the White House’s support for cutting back the Dodd-Frank Act, which attempts to centrally manage the financial system through thousands of pages of rules. The Financial CHOICE Act, which passed the House earlier this year, is a viable alternative to Dodd-Frank. If implemented, the CHOICE Act would usher in a potential revolution in financial regulation with common sense reforms that rolls back many of the worst provisions of Dodd-Frank, increasing the safety and soundness of the financial system.
While the administration is off to a great start, we have some helpful advice on how to further Shrink Government Bureaucracy. The administration should rethink the role of the Federal Deposit Insurance Corporation, which acts as a subsidy to banks, encouraging risk-taking that puts taxpayers at harm. Another is reforming the Securities and Exchange Commission. This outdated agency premises the nation’s securities laws on the situation American investors faced in the 1930s. Those conditions do not hold today, and it should be reformed. Last but not least would be to abolish the Consumer Financial Protection Bureau, an aggressive and unconstitutional agency that has imposed significant costs on the U.S. financial system and consumers.
We applaud the Trump administration’s intent to liberate Americans from the stranglehold of federal bureaucracy. This is no more evident than in the realm of banking and finance. Going forward, we encourage the administration to continue its good work, adding onto their success with support for the CHOICE Act and efforts to Shrink Government Bureaucracy. From us at CEI to everyone participating next week: happy Deregulation Day!