During the recent election campaign, President-elect Donald Trump pledged to repeal the Dodd-Frank Act if elected, criticizing the regulatory burdens it imposed on different portions of the financial services sector and contending that it discouraged lending by banks and impaired the growth of the U.S. economy. In an interview in May 2016, Mr. Trump stated that he would dismantle most of Dodd-Frank if elected, and that "Dodd-Frank is a very negative force, which has developed a very bad name." Mr. Trump continued, "Dodd-Frank has made it impossible for bankers to function ... It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop."1
Recently, Mr. Trump's post-election position on Dodd-Frank has become slightly clearer. Shortly after the election, Mr. Trump's campaign adviser Anthony Scaramucci said that the Trump administration will review the law and "the worst anti-business parts of it will be gutted." Additionally, on his transition web page, Mr. Trump's agenda regarding Dodd-Frank is stated as follows:
"The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation."2
Much of this criticism of the Dodd-Frank Act ("the DFA") has focused on its impact on the banking sector. There have not been any specific criticisms by Mr. Trump or his advisors directed to its impact on the insurance or reinsurance sectors. This article examines one possible alternative Republican legislative approach, based upon current policy proposals, focusing on possible changes to the DFA affecting the insurance and reinsurance sectors.3
The Financial CHOICE Act – A Possible Approach?
A discussion of possible changes to the DFA affecting insurance or reinsurance should start with the basic Trump and Republican policy approaches to the regulation of insurance and reinsurance. Although the President-elect has not issued policy pronouncements concerning insurance or reinsurance regulation, the Republican approach historically, and specifically in response to the Dodd-Frank Act, has been to strongly support the state-based regulation of the business of insurance in the United States, and President-elect Trump has not made statements indicating a disagreement with that approach.
A number of bills have been introduced over the past year or two which would repeal or substantially modify all or part of the DFA.4 On September 9, 2016, Rep. Jeb Hensarling, the chairman of the House Financial Services Committee, introduced H.R. 5983, The Financial CHOICE Act of 2016 ("The Financial CHOICE Act"). This 512 page bill proposes some fundamental changes to the DFA.5 This bill is notable in part because it was introduced by the chairman of the Financial Services Committee, Rep. Hensarling, who has been mentioned as one of several candidates for the position of Treasury Secretary in the Trump administration. Even if he is not named Treasury
Secretary, Rep. Hensarling may be a strong voice for the reform of financial services regulation in the Trump administration.6 This article focuses on The Financial CHOICE Act as a possible model for a Trump administration's approach to the DFA and the regulation of the financial services sector of the U.S. economy.
Footnotes
1 "Trump on North Korea, Wall Street regulation, tech stocks," Reuters, May 18, 2016, http://www.reuters.com/article/us-usa-election-trump-excerpts-idUSKCN0Y82OJ.
2 "Financial Services," President Elect Donald J. Trump Transition Website, https://www.greatagain.gov/policy/financial-services.html.
3 It is not the within the scope of this article to address the non-insurance aspects of the Dodd-Frank Act in other than a cursory fashion.
4 See e.g., H.R. 3118 (abolish the Consumer Finance Protection Bureau by repealing Title X of the DFA – introduced July 20, 2015); H.R. 4894 (repeal Title II of the DFA – introduced April 11, 2016); H.R. 4210 (amend the DFA with respect to the Financial Stability Oversight Council – introduced December 10, 2015); H.R. 2094 (repeal Titles I and II of the DFA – introduced April 29, 2015); H.R. 171 (repeal the DFA – introduced January 6, 2015).
5 Information about The Financial CHOICE Act is available on the web site of the House Financial Services Committee: (1) the full text of the bill (512 pages) (http://financialservices.house.gov/uploadedfiles/bills-114hr-hr5983-h001036-amdt- 001.pdf); (2) an executive summary of the bill (3 pages) ("Executive Summary") (http://financialservices.house.gov/uploadedfiles/financial_choice_act- _executive_summary.pdf); and (3) a comprehensive summary of the bill (126 pages) ("Comprehensive Summary") (http://financialservices.house.gov/uploadedfiles/ financial_choice_act_comprehensive_outline.pdf ).
6 See http://fortune.com/2016/11/16/jeb-hensarling-dodd-frank-financial-reform/.
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