United States: Dodd-Frank In A Trump Administration

Last Updated: January 5 2017
Article by Roland Goss

During the recent campaign, President-elect Donald Trump pledged to repeal the Dodd-Frank Act (DFA) if elected, criticizing the regulatory burdens it imposed and contending that it discouraged lending by banks and impaired the growth of the U.S. economy. Mr. Trump stated he would dismantle most of the DFA if elected, because it "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."

Shortly after the election, Mr. Trump's campaign adviser Anthony Scaramucci said "the worst anti-business parts of [the DFA] will be gutted." President-elect Trump's transition web page states he will replace the DFA with new policies to encourage economic growth and job creation.

Much of this criticism of the DFA has focused on its impact on the banking sector. Neither Mr. Trump nor his advisors have directed specific criticism at its impact on the business of insurance. This article examines one possible alternative Republican legislative approach, based on current policy proposals, focusing on possible DFA changes affecting the insurance sector.

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 issued no policy pronouncements concerning insurance or reinsurance regulation, the Republican approach historically, and specifically in response to the DFA, has been to strongly support the state-based regulation of the business of insurance in the United States, and President-elect Trump has made no statements indicating he disagrees with that approach.

Several bills introduced over the past two years would repeal or substantially modify all or part of the DFA. These include the Financial CHOICE Act of 2016 (The Financial CHOICE Act), introduced by House Financial Services Committee chair Rep. Jeb Hensarling, who was mentioned as a candidate for the position of Treasury Secretary in the Trump administration. This bill may provide a possible model for the Trump administration's approach to the DFA.

A published Executive Summary of the bill articulates its "Key Principles," which focus on simplicity and accountability of regulation, encouraging competition, consumer protection, avoiding government bailouts, and market management of systemic risk. The Executive Summary does not mention insurance, nor do any of the policy prescriptions laid out in that document relate directly to the business of insurance.

A published Comprehensive Summary of the bill begins with an outline of its provisions, which include "Improving Insurance Regulation by Reforming Dodd-Frank Title V." The insurance "improvement" discussion fills only two of the Comprehensive Summary's 126 pages, and addresses only one modest change: combining the positions of the Director of the Federal Insurance Office and the Financial Stability Oversight Counsel's (FSOC's) independent insurance representative into a single position. It also discusses the repeal of FSOC's Systemically Important Financial Institutions (SIFI) designation authority, which would impact some of the largest insurance companies.

The Financial CHOICE Act's approach would have only a modest impact on the business of insurance.

1. SIFI Designations

The SIFI designation process has been widely criticized for reasons that include: (1) the process is unnecessary or unwise; (2) the process violates principles of due process; (3) the process lacks transparency; and (4) the process is inappropriately applied to non-bank financial companies, such as insurance companies. The recent court opinion vacating Metlife's SIFI designation may provide further support for changing the SIFI process, at least as to insurance companies.

A concerted effort to change or eliminate the SIFI process seems likely. The Financial CHOICE Act would eliminate the SIFI designation process entirely, legislatively rescinding the designation of AIG, Prudential, General Electric Capital, and MetLife as SIFIs, and removing them from prudential regulation by the Federal Reserve.

2. Covered Agreements

The Federal Insurance Office has been engaged in discussions with the European Union (EU) concerning a possible covered agreement on two issues: (1) a temporary declaration that the U.S. markets satisfy the equivalence requirements of the EU's Solvency II insurance regulatory directive; and (2) what is termed the "credit for reinsurance issue," which involves the level of collateral that alien reinsurers must post for reinsurance agreements in the United States. There is widespread concern over Solvency II's potential impact absent some finding that the U.S. market satisfies its equivalence requirement. Beyond noting a lack of transparency, Republicans have not articulated opposition to a covered agreement addressing the equivalence issue.

The National Association of Insurance Commissioners (NAIC) may use the administration change as an opportunity to renew its opposition to a covered agreement encompassing the issue of collateral levels for credit for reinsurance provided by alien reinsurers. This issue has prompted complaints by alien reinsurers and foreign insurance regulators for many years, and the NAIC's effort to address it through a model act has not garnered sufficient support among the states, through the adoption of the model act, to resolve the issue uniformly throughout the United States.

The Financial CHOICE Act would leave in place the process for negotiating covered agreements concerning prudential insurance matters of international importance. There may be no changes to this area of the DFA.

3. The FSOC's Role

Republicans have criticized the extent to which the FSOC is involved in setting and implementing policy, and the lack of transparency in its operation. The FSOC's members have been criticized for their lack of insurance expertise and for applying "bank centric" rules to insurance companies. The Financial CHOICE Act would change the FSOC's role into that of, essentially, a monitoring and coordinating body.

4. The Federal Insurance Office (FIO)

The initial concern about the FIO was that it might morph into more of a regulatory office than a monitoring office, but its activities have focused on international issues while respecting the state-based regulation of insurance. We see no indication that a Trump administration would substantially change course in this area.

The Financial CHOICE Act would combine the positions of the Director of the FIO and the FSOC independent member with insurance expertise to reduce "fragmentation" and provide a single voice for the U.S. insurance industry at the domestic and international levels, including at the International Association of Insurance Supervisors, while preserving our traditional state-based system of insurance regulation.

5. The Nonadmitted and Reinsurance Reform Act (NRRA)

The NRRA portion of the DFA has been uncontroversial. The DFA encouraged the sharing of premium tax revenue for multi-state surplus lines placements among the states, and two mechanisms developed to share such revenues. However, both of these mechanisms have collapsed, resulting in no changes to that part of the market. The Financial CHOICE Act proposes no changes to the NRRA provisions of the DFA.


It is still early in the transition to a Trump administration, and little has been said about the DFA and insurance since the election. The development of the approach to the DFA and the issues discussed above will spark considerable interest. Whether the Trump administration will adopt the Financial CHOICE Act approach, or one similar, remains to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions