United States: Moving On: Core Principles For Dodd-Frank Reform Omit Mention Of Financial Crisis

Last Updated: February 8 2017
Article by Laurence E. Platt and Joy Tsai

Following his campaign promise to dismantle the Dodd–Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), Donald Trump issued an Executive Order on February 3, 2017 that set out "Core Principles" for regulating the financial system. Trump proclaimed that his administration would be "doing a big number on Dodd-Frank," yet his recent Executive Order on Core Principles appears to be more of a tempered call for analysis and review rather than an outright demolition of existing financial regulations, especially when read in light of the administration's more drastic requirement that Executive agencies must eliminate two existing regulations for each new one that it issues.

The February 3 Executive Order lists six ostensibly reasonable, but quite broad, Core Principles to guide financial regulation, and requires the Secretary of the Treasury to consult with the heads of the member agencies of the Financial Stability Oversight Council ("FSOC") before reporting to the President on how existing regulations promote or inhibit the Core Principles within 120 days of the Order. The FSOC agency members are the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Treasury Department, and the Consumer Financial Protection Bureau. Given that the Dodd-Frank Act established FSOC, designated the Secretary of the Treasury as the FSOC Chairperson, and required FSOC to provide annual reports to Congress, it is ironic that the Executive Order turns to FSOC for advice. Moreover, 120 days is not a particularly long period of time for new teams to take over FSOC members, where there are openings, much less to stamp a new imprint on the Dodd-Frank regulatory framework.

However, the Executive Order might be interpreted as an indicator of the administration's policy direction. The Core Principles identified in the Executive Order mirror key principles in the "Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs" Act ("CHOICE Act") that House Financial Services Chairman Jeb Hensarling championed—a sign that the Executive and Legislative branches intend to collaborate to replace at least some Dodd-Frank provisions with CHOICE. In an interview with Hensarling, Politico reported that the Financial Services Chairman responded optimistically to Trump's Order and believed that Trump "set[] the table for [Congress] marking up the Financial CHOICE Act." The Core Principles call to "empower Americans to make independent financial decisions," "prevent taxpayer-funded bailouts," "foster economic growth" through "regulatory impact analysis that addresses systemic risk," and "restore public accountability within Federal financial regulatory agencies." Similarly, the CHOICE Act identifies as its key principles that "every American...must have the opportunity to achieve financial independence," "taxpayer bailouts of financial institutions must end," "economic growth must be revitalized," "systemic risk must be managed," and "both Wall Street and Washington must be held accountable." In a difference with CHOICE, the Core Principles put additional emphasis on advancing American interests and American competitiveness in the international marketplace and on rationalizing the Federal financial regulatory framework. CHOICE's call for consumer protection against fraud and deception is absent in the Core Principles. Neither list of principles uses the common regulatory phrase of "safety and soundness."

Currently, Section Three of the CHOICE Act proposes several changes to Dodd-Frank that may be of particular interest to companies providing consumer financial services. CHOICE calls for comprehensive reform of the Consumer Financial Protection Bureau ("CFPB"), which it intends to rename the "Consumer Financial Opportunity Commission" ("CFOC"), an agency tasked with ensuring competitive markets in addition to consumer protection. A five-member commission subject to Congressional oversight and appropriations would head the CFOC, in place of the CFPB's current single director model. The CFOC would be required to obtain permission before collecting personally identifiable information on consumers, and would lose the authority to prohibit bank products and services it deems "abusive." Presumably, the then Director of the CFPB will have the opportunity to weigh in on these issues as a member of FSOC.

The Executive Order in itself is not a significant overhaul of Dodd-Frank. Implicit in the Executive Order's reliance on Core Principles is the fact that the provisions of Dodd-Frank are statutory in nature and implementing regulations can not be extinguished over night. Thus, the Core Principles simply can be viewed as a policy placeholder for the re-thinking of Dodd-Frank, in terms of both potential legislative and regulatory changes. Interestingly, though, there is no mention in the Core Principles to avoiding a repeat of the circumstances that led to the financial crisis. Rather, one could read the Core Principles as an attempt to seek to avoid the enactment of legislation and regulation like Dodd-Frank.

Financial institutions monitoring legislative activity for potential updates to the CHOICE Act should also watch out for the Secretary of the Treasury's Core Principles report—due June 2, 2017—to determine the future of financial regulation.

Originally published February 6, 2017

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2017. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Stroock & Stroock & Lavan LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Stroock & Stroock & Lavan LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

General

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