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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Rules & Regulations
The State of Financial Regulation Under the Trump Administration
[Photo of Paul Volcker]
by Howard Haykin
So, the Trump administration released a report that recommends a dialing back of banking rules. To the surprise of some, the report did not seek to eliminate Dodd-Frank’s Volcker Rule, which forbids proprietary trading at big banks. And it's interesting to note that the release came one business day after the Department of Labor’s fiduciary rule for retirement advisers went into effect (Friday, 6/9). All in all, a mixed bag that disappoints some people on both sides of the aisle.
BloombergView columnist Matt Levine offers logical rationale for why things went down as they did.
- Like it or not, there was significant support for provisions of the rules that addressed public concerns:
► retirement brokers were too conflicted, and their commission-based economic model encouraged them to recommend bad expensive products that paid them kickbacks.
► banks had become too risk-loving, and they were dominated by traders who got outsized rewards for taking on big risks
- Banks and brokerage firms had already changed their business models in response to the rules:
► Most brokerage firms have changed their business models largely away from commission-based compensation.
► Big banks have largely transitioned away from proprietary trading, though some indications of prop trading appear now and then.
- While no one in the Trump administration seems to have wanted the rule, this administration failed to appoint senior officials to the Labor Department who might have been capable of unwinding a major regulation so close to its implementation.
- Eventually these rules are can be repealed or their overly restrictive provisions can be dialed down - though that may be more easily said than done, for the following reasons:
► Both rules are aimed at changing the culture of the industries that they cover – and this appears to have been happened at brokerage firms and big banks.
► The longer these financial institutions operate within the bounds of such new cultures, the harder it will be for them to revert to the old business models.
Buckle up - it looks like we're in for a bumpy ride!