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U.S. Treasury Report Backs Dodd-Frank Reforms

The U.S. Congress should “take action to reduce fragmentation, overlap and duplication in the U.S. regulatory structure,” a move that could include the consolidation of federal regulators, according to a new report from the U.S. Treasury Department.

The document, “A Financial System that Creates Economic Opportunities,” is the department’s response to President Trump’s executive order 13772 to regulate the country’s financial system along a set of core principles that includes more efficient regulation and the prevention of taxpayer-funded bailouts.

Other recommendations include:

  • Having Congress reform the structure and mission of the Treasury Department’s Office of Financial Research to improve its effectiveness and to ensure greater accountability.
  • Raising the dollar threshold of participation in annual Dodd-Frank stress tests for financial institutions to $50 billion from the current threshold of $10 billion in total assets.
  • The Federal Reserve should subject its stress-testing and capital planning review frameworks to public notice and comment.
  • A significant restructuring in the authority and execution of regulatory responsibilities of the CFPB. “The CFPB was created to pursue an important mission, but its unaccountable structure and unduly broad regulatory powers have led to predictable regulatory abuses and excesses,” the report said.

The recommendations could help the Trump Administration and its Congressional supporters reform the Dodd-Frank Act. The U.S. House recently approved along party lines the Financial CHOICE Act of 2017 (HR 10), legislation that would overhaul Dodd-Frank and the CFPB but leaves interchange reform intact.

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