In what is likely to be viewed as a positive message for the financial services industry, on the afternoon of Friday, February 3, President Donald Trump signed an executive order announcing initial steps to reconsider major financial reform measures passed by Congress and implemented through regulations during the Obama Administration and in response to the 2008 financial crisis. While the order itself does not mention the Dodd-Frank Act or any of its requirements specifically, President Trump has repeatedly expressed his intent to roll back provisions of that Act, which he has referred to as a "disaster." This move is largely seen as setting the stage for a broad loosening of financial regulations.

The order directs the Treasury secretary to meet with other top financial regulators comprising the Financial Stability Oversight Council and deliver a report to the President within 120 days on the extent to which existing laws, rules, and regulations promote or inhibit the "Core Principles" of the Trump Administration's vision for the US financial system:

  • Promoting and empowering financial independence and informed choices in the financial marketplace
  • Preventing taxpayer-funded bailouts
  • Engaging in a more scrupulous evaluation of financial regulations that address systemic risk and market failures in an effort to promote economic growth and stronger financial markets
  • Enabling American companies to be competitive with foreign firms both in the US market and abroad
  • Advancing American interests in international financial regulatory negotiations and meetings and
  • Restoring public accountability within financial regulatory agencies and rationalizing the financial regulatory framework.

President Trump separately signed a presidential memorandum to delay implementation of the Labor Department's Fiduciary Duty Rule. That rule would expand the definition of "investment advice fiduciary" under the Employee Retirement Income Security Act of 1974 (ERISA) and, in doing so, elevate all financial professionals who work with retirement plans or provide retirement planning advice to the level of fiduciary.

The rule was scheduled to be phased into effect beginning April 10, 2017. It now must undergo further review by the Labor Department to determine whether it will adversely affect the ability of Americans to gain access to retirement information and financial advice and whether it is likely to cause an increase in litigation. If the answer is in the affirmative, the memorandum instructs the Labor Department to publish a proposed rule for notice and comment that rescinds or revises the Fiduciary Duty Rule. Acting Labor Secretary Edward Hugler stated that the Department of Labor "will now consider its legal options to delay the applicability date [of the Fiduciary Rule] as we comply with the President's memorandum."

Both directives issued by President Trump are somewhat limited in scale, but indicate that the Trump Administration will prioritize the scaling back of financial regulations.