President-elect Trump is still over a month away from being sworn into office (potential electoral college and recount surprises notwithstanding), and already he has signalled that he will take actions that depart significantly from what he built his campaign around: no special prosecutor will be appointed to go after Secretary Clinton (given the FBI’s conclusion that no evidence supported a charge, it is not clear where that would have gone anyway), major aspects of Obamacare will be retained, and the famous border wall will now be “some fencing,” for starters.
Where Trump stood on economic issues and white collar regulation in particular were hazy during the campaign, with Trump criticizing Clinton’s connections to Wall Street while making general statements that he would reduce regulation. The direction of the Trump administration on white collar regulation, and specifically the Dodd-Frank Act, became a little clearer in late November after Trump selected Steve Mnuchin, a former executive at Goldman Sachs (yes, the same Goldman Sachs that Trump heavily criticized Clinton over for her connections to the Wall Street investment house) to lead the Treasury. A day after his selection, Mnuchin gave a wide-ranging interview with CNBC in which he expressed a desire to roll back aspects of the Dodd-Frank Act, the landmark economic law signed into law by President Obama in 2010.
What We Know About Mnuchin’s Views On Dodd-Frank
Like many of the individuals selected thus far to serve in top posts in the Trump Administration, Mnuchin has no experience working in government, and thus no history of implemented policy stances. Mnuchin has worked in banking, however, and like many in the financial industry, he has expressed reservations about Dodd-Frank. He told CNBC:
The number one problem with Dodd-Frank is it’s way too complicated and it cuts back lending, so we want to strip back parts of Dodd-Frank that prevent banks from lending and that will be the number one priority on the regulatory side. The number one priority is going to be make sure that banks lend.
Mnuchin went on to say that, because he had worked in banking, he knew what was required to help banks make loans to small and mid-sized companies. He did not, however, provide any specifics on which “parts of Dodd-Frank” that he intends to strip back. Mnuchin also does not appear to have made any significant statements providing further elaboration on his views on Dodd-Frank prior to his selection, having said only that there were positive and negative aspects about the law.
It is worth noting that Mnuchin does not appear to be rigidly partisan, having donated to Clinton and President Obama in the past.
Many Questions Remain Regarding the Future of Dodd-Frank
The Dodd-Frank Act is, of course, a law with many different facets, from the creation of the Consumer Financial Protection Bureau, which provides consumers with a simple mechanism to submit complaints regarding financial institutions to the bureau which may respond with an investigation, to the creation of the SEC Whistleblower Program which provides insiders who bring information of financial wrongdoing to the agency with large monetary awards (which many have criticized as weakening internal compliance programs). Although Mnuchin has provided some clues to the future by focusing in on lending standards, how the many other aspects of Dodd-Frank relevant to company executives and in-house counsel will be affected remains unclear.
At this point, those in the white collar profession attempting to predict how white collar regulation and enforcement in the coming months and years will change may simply have to “expect the unexpected.” Unlike other administrations that have come into office with clear agendas, this one has thus far repeatedly defied expectations, so it is important that we pay extra close attention to developments at the highest levels of our federal government and what those developments will mean for our clients.