President Trump aimed to dismantle even more financial regulations with executive orders on Friday, directing Treasury officials to take another look at tax rules and oversight of “too big to fail” financial institutions.
In a signing ceremony at the Department of the Treasury, Trump once again signaled that he intends to roll back many of the sweeping regulations the Obama administration adopted in the aftermath of the 2008 financial crisis.
“We have taken unprecedented action to bring back our jobs and return power to our citizens. It’s been taken away. We’ve lifted one terrible regulation after another at a record clip, from the energy sector to the auto sector. And we have many more to go,” Trump said. “We’re here today to continue this great economic revival.”
The directives Trump signed Friday will:
► Review significant tax regulations issued in 2016 and 2017 that are overly complex and “impose an undue financial burden” on taxpayers.
“Such a big thing. People can’t do their returns. They have no idea what they’re doing. They’re too complicated,” Trump said.
But the order is more likely to target corporate taxes than individual returns. Among the most significant tax regulations adopted in the last year of the Obama administration were a clampdown on so-called “tax inversions,” which allow multinational corporations to get favorable tax treatment by merging with companies in lower-taxed countries.
“It’s obviously one of the significant things, and one of the things we’ll be looking at,” Treasury Secretary Steven Mnuchin told USA TODAY. “We’ve got 100 people in the tax department across the street at Treasury, and they are looking at everything.”
► Direct the Treasury Secretary not to use orderly liquidation authority to bail out insolvent financial institutions, reigniting the debate over a key provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Critics have said that provision could actually allow banks to take more risks than they ordinarily would, and Trump wants to re-examine whether court-supervised bankruptcy would be a better way to wind down failing banks.
“It doesn’t sound like much, but it is,” Trump said on signing the directive. “That’s a biggie.”
Former Federal Reserve Chairman Ben Bernanke has been among those who are vocal supporters of the provision. Eliminating it “would be a major mistake, imprudently putting the economy and financial system at risk,” he wrote in an essay for the Brookings Institution in February, calling the provision “an essential tool for ensuring that financial stress does not escalate into a catastrophic crisis.”
► Review the process for the Financial Stability Oversight Council to designate non-bank financial institutions like insurance companies as “systemically important” to the financial system. Those companies are then subject to additional oversight by the Federal Reserve. The order will impose a 180-day moratorium on new designations.
Trump said the regulations “enshrine ‘too big to fail’ and encourage risky behavior.”
Like most of Trump’s regulatory executive orders, Friday’s presidential actions will have little effect by themselves. Instead, Trump will instruct regulators to reexamine existing rules with an eye to rescinding them. But that process of deregulation can be as complicated as the original regulations, requiring the Treasury Department to ask for public comment and conduct a legal analysis.
And Mnuchin said the orders don’t give him any authority he doesn’t already have. “The purpose of the orders is to make clear what the administration’s and the president’s priorities are, and signal the importance of these issues to the American people,” he said.
The actions to be signed Friday include one executive order and two similar directives called presidential memoranda. In his first 92 days, Trump has now signed 25 executive orders and 15 presidential memoranda.
–USA Today, Gregory Korte