Treasury Secretary Mnuchin Must Answer For Removing Safeguards Against Another Financial Crisis
WASHINGTON, D.C. — As U.S. Treasury Secretary Steven Mnuchin returns to Capitol Hill this morning to continue pushing false narratives like the Trump tax cuts created jobs, consumer advocacy group Allied Progress called on Mnuchin to explain how his efforts to slash and burn banking regulations are anything but another financial crisis in the making.
By its own boastful estimates, the Treasury Department has proposed eliminating or weakening over 300 financial industry regulations. A 2017 Americans for Financial Reform report found dozens of Treasury’s recommendations mirrored requests made by The Clearing House, the leading trade association for big banks. It was reported this week that House Republicans are pressuring banking regulators to implement Treasury/Clearing House’s detailed suggestions for removing limits on banking risk put in place after the financial crisis.
“Secretary Mnuchin may be proud of his record letting big banks write their own rules but he has yet to defend it,” said Derek Martin, director for consumer watchdog group Allied Progress. “Mnuchin — and the Republicans twisting regulators’ arms on his behalf – want to let banks go back to the same risky behavior that gave us the Great Recession and left American consumers holding the bag. People like Donald Trump and Steven Mnuchin know they won’t suffer during another financial crisis, they’ll just take advantage of the people that do.”
As Allied Progress has noted, it’s no surprise Republicans on the House Financial Services Committee are helping carry Mnuchin’s water on banking deregulation after taking over $20 million from the industry.
But their arguments that big banks are being treated unfairly ring hollow after the industry posted a record $59 billion in profits and with banking enforcement actions at historic lows under the Trump administration.
WHAT YOU NEED TO KNOW:
Secretary Steven Mnuchin Is Cutting Hundreds Of Regulations That Hold The Banking Industry Accountable, Leaving Consumers Vulnerable To Abusive Practices And Removing Safeguards Against Another Financial Crisis
Under Steven Mnuchin’s Leadership, The Treasury Department Has Prided Itself In Cutting Over 300 Regulations Holding The Finance Industry Accountable—And Plans To Continue Loosening Regulations For Banks.
After Donald Trump Issued An Executive Order To Cut Regulations, The Treasury Department Issued A Series Of Reports Calling For Sweeping Changes To Reduce Regulation Of The Finance Industry.
Following Donald Trump’s 2017 Executive Order To Cut Regulations, The Treasury Department “Focused A Large Portion Of Its Focus On The Finance Industry.” “On January 30, 2017, the president issued Executive Order 13771, ‘Reducing Regulation and Controlling Regulatory Costs.’ This order declares that for every new significant regulation issued, at least two prior regulations, sufficient to offset the incremental cost of the new regulation, be identified for elimination. The Treasury focused a large portion of its focus on the finance industry, preparing a number of reports with recommendations addressing financial regulation, the report states.” [Kelsey Ramírez, “U.S. Treasury boasts deregulation reform accomplishments,” HousingWire, 04/24/18]
- Treasury Issued “A Series Of Lengthy Reports Calling For Sweeping Revisions To Banking Regulations Put In Place After The 2008 Meltdown.”“Under Phillips’s watch the Treasury issued a series of lengthy reports calling for sweeping revisions to banking regulations put in place after the 2008 meltdown. However, much of the effort is incomplete while several agencies work through the suggested changes.”[Robert Schmidt and Seleha Mohsin, “Trump’s Architect of Wall Street Deregulation to Leave Treasury,” Yahoo! Finance, 05/16/19]
Treasury Reported It Has Eliminated Or Proposed Eliminating Over 300 Regulations Since Trump’s Executive Order.
In April 2018, The Treasury Department Reported That It Had Eliminated Or Proposed Eliminating Or Modifying 305 Regulations And Had Issued More Than 250 Specific Recommendations To “Reform & Reduce Burdens Of Financial Regulation.” [“Regulatory Reform Accomplishments Under President Trump’s Executive Orders,” U.S. Department of the Treasury, 04/24/18]
Steven Mnuchin Said That Treasury Will Continue Cutting Regulations This Year.
In November 2018, Steven Mnuchin Said That The Treasury Department Would Remain Focused On “The Reduction Of Regulatory Burdens” Through 2019. In the Treasury Department’s 2018 Agency Financial Report, Steven Mnuchin wrote, “Our Department has taken a leading role in fulfilling the Trump Administration’s promise of prosperity and security for all Americans, and I am proud of what we have achieved together. As we prepare to enter 2019, the Treasury remains focused on the successful implementation of the Tax Cuts and Jobs Act (TCJA), the reduction of regulatory burdens, and countering illicit financial activity at home and abroad.” [“Agency Financial Report, Fiscal Year 2018,” U.S. Department of the Treasury, 11/15/18]
The Treasury Department Has Recommended Rolling Back Regulatory Protections Put In Place After The 2008 Financial Crisis, Including Substantially Limiting The Authority Of The Consumer Financial Protection Bureau (CFPB).
In Its Reports, The Treasury Department Recommended Rolling Back “Many Of The Central Provisions Of The Dodd-Frank Act,” Including Substantially Limiting The Authority Of The Consumer Financial Protection Bureau (CFPB) And Relying On Informal Guidance To Hold Banks Accountable.
In June 2017, The Treasury Department “Called For The Neutering Of Many Of The Central Provisions Of The Dodd-Frank Act,” Including Recommending That “The Consumer Financial Protection Bureau Should Be Substantially Stripped Of Its Powers.” Their Own Gain.” “The Trump administration called for the neutering of many of the central provisions of the Dodd-Frank Act as it offered its most detailed plans to date for the unraveling of the financial regulations put in place after the 2008 financial crisis. In a report released [in June 2017], the Treasury Department said the Consumer Financial Protection Bureau should be substantially stripped of its powers, accusing the agency of regulatory overreach and saying the president should be able to remove its director. It also recommended greater exemptions from the so-called Volcker Rule, which bans banks from trading for their own gain, and it called for rules to be revised to give small community banks relief from regulatory scrutiny such as stress tests.” [Alan Rappeport and Matthew Goldstein, “Trump Administration Says Financial Watchdog Agency Should Be Defanged,” The New York Times, 06/12/17]
- Americans For Financial Reform, A Consumer Advocacy Organization, Warned That Treasury’s Proposals Would “‘Put The Economy At Risk And Allow The Same Practices That Led To The Recession.’” “Progressive groups condemned the recommendations as proposals that would put the economy at risk and allow the same practices that led to the recession. ‘The financial crisis had devastating costs for families and communities, and everyday abuses in financial markets cost people tens of billions of dollars a year,’ said Lisa Donner, executive director of Americans for Financial Reform. ‘Financial reform has made the system safer, and the C.F.P.B. is returning billions of dollars to consumers facing industry tricks and traps.’” [Alan Rappeport and Matthew Goldstein, “Trump Administration Says Financial Watchdog Agency Should Be Defanged,” The New York Times, 06/12/17]
In October 2017, Treasury Issued A Report On How To Reduce Disclosure Requirements For Companies And Issue Regulations Through Informal Guidance Rather Than Formal Rulemaking. “Capital markets report: In October , this report explained how to streamline and reform the regulatory system for capital markets, according to the Treasury. The report claimed some ways to reduce the burden on companies looking to go public or stay public including tailoring and streamlining disclosure requirements according to company size; incorporating more robust economic analysis and public input into the rulemaking process; limiting imposing new regulations through informal guidance rather than notice and comment rulemaking and many more suggestions.” [Kelsey Ramírez, “U.S. Treasury boasts deregulation reform accomplishments,” HousingWire, 04/24/18]
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