President Donald Trump has promised to relax “horrendous” US banking regulations that were introduced after the financial crisis.
Referring to the Wall Street and consumer protection rules Barack Obama enacted in 2010, Donald Trump said: “We’re going to do a very major haircut on Dodd-Frank.”
Dodd-Frank aimed to prevent banks taking on too much risk and to separate their investment and commercial arms.
However, President Trump said he wants “some very strong” change to help the bank sector.
“We want strong restrictions, we want strong regulation. But not regulation that makes it impossible for the banks to loan to people that are going to create jobs,” he told a group of about 50 business leaders at a White House meeting.
“We’re going to be doing things that are going to be very good for the banking industry so that the banks can loan money to people who need it.”
Donald Trump had promised during his election campaign to relax rules on big banks, and subsequently ordered a review of the industry’s regulations.
The president’s remarks have the backing of Jamie Dimon, chairman and chief executive of one of the world’s biggest banks, JP Morgan Chase.
In his annual letter to shareholders, released on April 4, Jamie Dimon said the regulatory burden “is unnecessarily complex, costly and sometimes confusing”.
Dodd-Frank was designed to resolve the too-big-to-fail problem that meant banks facing collapse had to be bailed out rather than wound down.
However, Jamie Dimon said banks had essentially solved this issue by boosting the capital they held in reserve and introducing tougher risk controls.