William D. Cohan, author of the forthcoming “Why Wall Street Matters,” offered his thoughts on how best the Trump administration can proceed with dismantling the Dodd-Frank Act. Here, in part, is what he had to say:

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Donald Trump has surrounded himself with Wall Street bankers in his administration and advisory groups – including:

• Stephen Schwarzman, billionaire co-founder of the Blackstone Group, who chairs the Strategy and Policy Forum;
• Jamie Dimon, Chairman, CEO of JPMorgan, who sits on the Strategy and Policy Forum;
• Gary Cohn, former president of Goldman Sachs, who now is director of the National Economic Council;
• Stephen Bannon, a Goldman alum, who is Donald Trump’s chief strategist; and,
• Steven Mnuchin, another Goldman alum, who is Trump’s pick for Treasury secretary.

Now that Wall Street has been welcomed back to Washington, it should use its return to the corridors of power to repair its tarnished reputation and to restore public confidence in the markets. Mr. Trump can help make this happen, but only if he trades the repeal of Dodd-Frank for a wholesale reform of how bankers, traders and executives are compensated on Wall Street. A new system that rewards prudent risk-taking and holds people personally and financially accountable for their actions is a prerequisite to restoring our faith in Wall Street.

What Regulations to Keep:    for instance, demanding that big banks have more capital and less leverage; requiring that often-risky financial derivatives be traded on exchanges so that their pricing is more transparent; ensuring that brokers have their customers’ best interests at heart when advising them on their retirement accounts - the fiduciary rule, which Mr. Trump is unfortunately likely to eliminate.

What Regulations to Jettison:    According to Davis Polk law, there are more than 22,000 pages of Dodd-Frank-related rules, requirring 20% of Wall Street employees to do nothing more than monitor what the other 80% do. One particularly nonsensical requirement penalizes big banks for trying to help clients buy and sell bonds without forcing them to pay a higher price (when they buy) or to receive a lower price (when they sell).

The 2008 financial crisis badly hurt Wall Street by removing all doubt that the people who work there are in it for themselves (and their fat paychecks) regardless of the consequences of their poor judgment on the rest of us. That perception must be changed if we want ordinary Americans to benefit from a functioning Wall Street.

JUNKING WALL STREET’S COMPENSATION SYSTEM.    So, while Mr. Trump and his banker buddies whittle away at Dodd-Frank, they need to do something else as well: junk Wall Street’s compensation system, which continues to reward bankers for making big bets with other people’s money and does nothing to hold them accountable when the bets go bad. We need to replace this system with one that rewards people when they succeed but penalizes them when they fail.

To do this, the government could require that the leading executives at each big bank - the top 500 or so people - put their own assets on the line in the event of a bankruptcy filing, bailout or default. This would go beyond a now doomed Dodd-Frank proposal to claw back bonuses. Only something like this would properly align risk and reward on Wall Street, and help to prevent the next financial crisis. This is actually how Wall Street worked once upon a time, when it was just undercapitalized small firms in which partners invested their own hard-earned capital.