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Will Trump Administration ‘dismantle’ Dodd-Frank?

On consecutive days just after the presidential election, The Wall Street Journal ran articles with the following headlines, “Donald Trump’s Transition Team: We Will ‘Dismantle’ Dodd-Frank” and “Full Repeal of Dodd-Frank Isn’t Main Focus of Trump Transition.”

And so it goes at the tail end of one of the most politically turbulent years in decades. As the focus is now shifting from politics to policy, pundits everywhere are taking their shots at reading the tea leaves and reading between the lines. In addition, it’s all happening in a real-time, social media-frenzied environment.

Enter this Dix & Eaton blog series, in which we hope to provide some context around how the key political and policy issues of the day could impact investor relations, public companies, the capital markets and more. Many polls and pundits were way off in their calculations heading into the election, so we’re well aware of the risks in trying to play the prediction game. As Yogi Berra said, “It's tough to make predictions, especially about the future.”

We’re going to take our best shot at analyzing and interpreting the ideas and decisions coming out of President-elect Trump’s transition team – starting with the future of Dodd-Frank.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010 by a Democrat-controlled Congress to overhaul the financial system in the wake of the 2008 economic collapse. Since the law was passed, more than 400 new regulations have been implemented and several new bureaucracies have been created, including the Consumer Financial Protection Bureau (CFPB), which deals with consumer complaints related to banks, credit card providers, mortgage lenders and other financial services companies.

Trump’s Financial Services Policy Implementation team said it “will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.” The Trump team and the President-elect’s pick to head the Department of the Treasury, former Goldman Sachs banker Steven Mnuchin, are particularly focused on reducing the regulatory burden on banks – and, not coincidentally, bank stocks have been surging since this has become a major post-election issue.

Based on everything we have seen and heard, the Trump Administration is likely to make significant changes in Dodd-Frank implementation. Many of the banking rules are likely to be revised, and some may be eliminated, such as the rules that created the CFPB. However, a full repeal of the law or an attempt to rewrite the entire law appears to be unlikely. At this point, we also think it’s unlikely that the Trump Administration and the Republican-controlled Congress will seek to revise the “say-on-pay” proxy vote requirements, the additional compensation disclosures or enhanced governance provisions that affect public companies. Also likely to remain in place are conflict minerals rules that came out of Dodd-Frank.

On balance, the sense right now is that most of the plans to “dismantle Dodd-Frank” will be focused in a handful of key areas, but they probably won’t have a significant impact on most public companies and their investor relations programs. We’ll keep an eye on it, and you should too.

Stay tuned to this Dix & Eaton post-election blog series as we address other topics. Let me know if you have an idea for us or if you want to talk further about Dodd-Frank.

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