Trump Takes Aim at Wall Street’s Favorite Financial Regulation

breitbart ^ | JOHN CARNEY

[davikkm]

President Donald Trump ordered the Treasury Department on Friday to examine two controversial powers given to financial regulators in the aftermath of the 2008 financial crisis, including a bailout authority widely favored by the biggest banks. One of the memos Trump signed Friday takes aim at the “Orderly liquidation authority” or OLA, which authorizes the federal government to take over and wind down a failing financial firm. It instructs Treasury to examine whether OLA encourages excessive risk-taking or exposes taxpayers to liability. It also orders Treasury not to use OLAA while the review is underway.

OLA has been a target of conservative critics for years, largely because it permits federal regulators to attempt to deal with a failing financial firm outside of ordinary bankruptcy procedures. If regulators conclude that bankruptcy would cause serious financial disruption, they can invoke OLA to take over the failed firm and use taxpayer funds to keep it operating until it can be wound down in an orderly manner. Critics say this creates an implicit “safety net” for too-big-to-fail financial firms, creating moral hazard and encouraging excessive risk-taking.

Not surprisingly, OLA is one of the regulatory powers created by Dodd-Frank that the big Wall Street firms actually would rather keep in place. Because OLA would likely cushion the impact of a big bank’s failure on creditors and counterparties, it reduces the cost funding for the big banks. It may also give the biggest firms a competitive advantage over smaller competitors whose customers, counterparties, and creditors would still have to worry about the prospects of a formal bankruptcy.

[davikkm]

Finally, this is so long overdue. The problem with OLA is much, much more complex than Carney states in this article as is the overreach by SIFI. Small banks have been crushed by OLA while big ones have been propped up. Dodd/Frank was a real nightmare.

[plain talk]

Another Dodd-Frank regulation they need to get rid of is the requirement that banks and traders record all conversations with clients and make them available to the feds. It increases costs and amounts to over-reach.

[freedumb2003]

Man, go after the Consultancy-full-utilization-act aka Sarbanes-Oxley aka SOX.

Never have so many hours of effort been put into something of so little value.

[Major Matt Mason]

It's nice that Trump is doing this, and I'll assume he is serious about changing the rule. But I doubt the big banks will give this up without a fight, and it is anyone's guess as to whether the GOP will cave to the bankers.

[Cen-Tejas]

This is great news and Go Trump!

But, the big banks MUST be broke up. “BIG” is “BAD” in banking more so than any other industry. Entire library’s could be written on “how” its bad.