Bank stocks soar as Trump targets Dodd-Frank regulations

The U.S. House of Congress

During the campaign and transition, Trump and his advisors would swing wildly from criticizing Obama for not doing enough to fight Wall Street special interests, to vowing to overturn the rules regulating the industry.

The executive action cannot obliterate Dodd-Frank on its own and without the help of lawmakers in Congress, but it has started an evaluation process that could lead to a sweeping dismantling of the Wall Street regulations and institutions put in place following the financial crisis. The question, as always when the Trump White House repeals laws or regulations, is what the administration intends to do instead.

Trump called the regulation a "disaster" recently during a meeting with business leaders. Trump has spoken about scaling back Dodd-Frank- and possibly jeopardizing the stability of America's economy and our economic protection-in the interest of his friends who "have nice businesses". "They just can't get any money because the banks just won't let them borrow it because of the rules and regulations in Dodd-Frank".

The executive order instructs the Treasury secretary to conduct a review of the law, which was crafted and implemented in 2010 following the 2008 financial crisis.

Trump had promised to dismantle Dodd-Frank, claiming it was holding back lending and tying up business in red tape.

On Fox Business Network this morning, White House economic adviser Gary Cohn said the order is aimed at freeing up capital for entrepreneurs and small businesses. The law severely limited risk-taking on Wall Street with an aim of essentially turning banks into utilities, but critics claim the regulations made it impossible for banks to function efficiently and provide the US economy with the credit it needs. "It is a bad rule for consumers", Cohn said.

Many of the Act's supporters point to the billions of dollars returned to US consumers through regulatory actions mounted by the Consumer Finance Protection Bureau, an agency created by the Act whose future is now in doubt.

Rumours (or fears, depending on who you ask) that Donald Trump is looking into scrapping the Dodd-Frank Act seem to have been confirmed today, as US President has ordered a wide-ranging review.

Reportedly, both Trump and Steven Mnuchin, Trump's nominee for secretary of treasury and a former partner of Goldman Sachs and hedge fund manager, are in favor of "a 21st century version" of Glass-Steagall Act, a post-Depression act that required that banks separate commercial deposit banking from investment banking.

Earlier Friday, the Senate used an unusual pre-dawn vote to approve legislation, 52-47, killing a regulation that has required oil and gas companies to disclose payments to the US or foreign governments for commercial development. Lisa Donner, executive director of lobby group Americans for Financial Reform, said: "What they are trying to do is make it easier for big banks to steal from people". "There's the administrative piece, which [Trump] is starting to address through executive action, and then there's the legislative piece, which we're going to work with congress on", Spicer said.