United States: The Trump Administration: President Trump Issues Executive Actions On Dodd-Frank And The DOL Fiduciary Rule

On February 3, 2017, President Trump signed two executive actions intended to provide a framework for scaling back the Dodd-Frank Act ("Dodd-Frank Act")1 and rescinding or revising the Department of Labor's "fiduciary rule."2

As we have previously written,3 President Trump and the Republican-majority Congress have various levers to rapidly revise and reverse the previous administration's policies, short of legislative change.  Such mechanisms include the Congressional Review Act4 and various forms of executive action, including executive orders, discretionary agency directives and enforcement decisions.  These executive actions are likely the beginning of a series of changes intended to reduce the regulatory burden on U.S. financial markets.

This memorandum discusses the two executive actions and their significance within a broader agenda to reshape financial regulation. 

Dodd-Frank

Despite indications from the President and the press that the executive order would materially scale back the Dodd-Frank Act,5 it does not do so (at least not directly).  Rather, the executive order sets out six "Core Principles" guiding the Trump Administration's policy towards financial regulation.  The executive order then directs the Secretary of the Treasury, along with the heads of the FSOC member agencies (i.e., the Federal Reserve, the FDIC, the OCC, the CFPB, the SEC, the CFTC, the NCUA, and the FHFA) to issue a report within 120 days, and periodically thereafter, addressing whether existing laws, regulations, and similar requirements are consistent with these Core Principles, and identifying any such laws, regulations or similar requirements that inhibit those Core Principles.

The Core Principles are broadly stated and do not identify any particular aspect of existing financial laws or regulations that is a likely target for change.  The Core Principles are:6

  • empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;
  • prevent taxpayer-funded bailouts;
  • foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry;
  • enable American companies to be competitive with foreign firms in domestic and foreign markets;
  • advance American interests in international financial regulatory negotiations and meetings; and
  • restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

Notably absent from the Core Principles is any specific indication as to the President's direction towards the Consumer Financial Protection Bureau, reform of government-sponsored entities (i.e., Fannie Mae and Freddie Mac), the Volcker Rule, or small bank relief – as had previously been anticipated.

The true direction of the President's financial reform agenda remains somewhat unclear, and likely will not become clearer until the President appoints (and the Senate confirms) new leaders of the various "independent" financial regulatory agencies.7  Further, it should not be overlooked that the most significant financial reform cannot be accomplished in the absence of legislation or extensive agency rulemaking, and thus is unlikely to occur in the near term.  Any near-term impact will be more subtle, as the new agency heads are appointed and begin to adopt supervisory and enforcement policies regarding existing laws and regulations that may deviate from those policies followed by President Obama.8

Fiduciary Rule

President Trump also issued the Fiduciary Memo directing the Secretary of Labor9 to reexamine the "fiduciary rule" adopted by the Department of Labor ("DOL"), which is set to become applicable on April 10, 2017.10   The rule, issued in final form in April 2016, significantly expands the circumstances in which persons will be considered "fiduciaries" to plans and individual retirement accounts under the Employee Retirement Income Security Act of 1974 and Section 4975 of the Internal Revenue Code of 1986 in connection with the provision of investment advice.

The Fiduciary Memo states that among President Trump's priorities are to "empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies."

The Fiduciary Memo then directs the Secretary of Labor to examine whether the Fiduciary Rule would adversely impact investors.  As part of the examination, the Secretary is directed to prepare an updated economic and legal analysis concerning the likely impact of the Rule which will consider, among other things:  (i) whether the Rule has harmed or is likely to harm investors by limiting access to certain retirement offerings, products and advice, (ii) whether the anticipated applicability of the Rule has resulted in dislocations or disruptions within the retirement services industry, or (iii) whether the Rule is likely to cause an increase in litigation and prices to access retirement services. 

If the Secretary affirms any of the negative effects listed above, or if it determines that the Fiduciary Rule is otherwise inconsistent with any of the stated priorities in the Fiduciary Memo, he is directed to publish a proposed rule that rescinds or revises the Fiduciary Rule.  The Fiduciary Memo does not include specific information regarding a delay of the applicability date of the rule.  Acting Secretary of Labor Hugler separately announced that the DOL is considering legal options to delay the Fiduciary Rule's applicability date in order to comply with the President's memorandum.11

Conclusion

While neither of the executive actions taken by President Trump directly modify existing financial regulation or "roll back" the Dodd-Frank Act, they represent a strong initial move to set a regulatory agenda.  Moreover, while the impact on independent agency rulemaking and implementation is likely to be felt over time, the DF Executive Order demonstrates a clear intent to use the bully pulpit as well as appointment power over agency heads to set the regulatory agenda in broad but direct terms. 

Footnotes

1 Presidential Executive Order on Core Principles for Regulating the United States Financial System (Feb. 3, 2017) ("DF Executive Order"), available at https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states.

2 Presidential Memorandum on Fiduciary Duty Rule (Feb. 3, 2017) ("Fiduciary Memo"), available at https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-memorandum-fiduciary-duty-rule.

3 The Trump Administration: Change by Executive Action and Inaction (Dec. 9, 2016) and The Trump Administration: Potential Levers of Regulatory Change Affecting the Commodities Markets (Dec. 21, 2016).

4 See, e.g., Cadwalader Cabinet, House Votes to Nullify SEC Resource Extraction Rule (Feb. 2, 2017).

5 At an event before the release of the executive order, the President was quoted as saying, "We expect to be cutting a lot out of Dodd-Frank . . . ."  See, e.g., New York Times, Trump Moves to Roll Back Obama-Era Financial Regulations (Feb. 3, 2017).

6 There may be a seventh Core Principle.  The DF Executive Order, as published on the White House web site, jumps from clause (e) to (g).  According to a version that circulated in press reports, clause (f) would have said, "make regulation efficient, effective, and appropriately tailored; and".

7 Unlike the executive agencies (e.g., the Department of the Treasury or the Department of Labor), the President has more limited direct power to shape the agendas of independent regulatory agencies (e.g., the Fed, the SEC and the CFTC).

8 The Trump Administration: Change by Appointment (Nov. 18, 2016).

9 President Trump has picked Andrew Puzder (currently the CEO of CKE Restaurants) to serve as Secretary of Labor, but Mr. Puzder has yet to be confirmed by the Senate.  Currently, the acting Secretary is Edward C. Hugler.

10 81 Fed. Reg. 20946 (Apr. 8, 2016) ("Fiduciary Rule" or the "Rule").

11 News Release, US Department of Labor to Evaluate Fiduciary Rule (Feb. 3, 2017).

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.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
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