Cohn: Can Do 'Quite a Bit' on Dodd-Frank Without Congress

TL;DR

Cohn discusses deregulating Dodd-Frank to boost bank lending.

Transcript

so let's turn now to your announcement today of the review of Dodd Frank as an example of that proposal to deregulate can you get where you need to go without going through Congress we can do quite a bit uh of what we need to do obviously we're going to work with Congress I met this morning with Jeb henserling and his committee members to talk abou... Read More

Key Insights

• Gary Cohn emphasizes the Trump administration's ability to modify Dodd-Frank regulations without full reliance on Congress, although collaboration with both the House and Senate is sought to enhance effectiveness.
• The primary goal is to reinvigorate bank lending to small and medium-sized businesses, which are seen as major job creators, by easing the capital hoarding requirements imposed by Dodd-Frank.
• Cohn acknowledges the necessity of maintaining deep, liquid, and transparent markets, positioning the U.S. as a leader in financial services, while advocating for smart, effective regulation rather than complete deregulation.
• The Volcker Rule, which restricts banks from making certain kinds of speculative investments, is under review, with potential simplifications being considered rather than outright repeal, aligning with Treasury Secretary Mnuchin's stance.
• Cohn stresses the burden of regulatory costs on banks, indicating that reducing these costs is essential to freeing up capital and enhancing lending capabilities.
• The administration's approach is not anti-regulation but seeks a balance to ensure that financial markets and institutions are well-regulated yet functional and competitive.
• Collaboration with Congress is seen as beneficial, with both houses showing interest in reforming regulatory processes across various industries, not just financial services.
• The overarching aim is to create a more effective job creation vehicle through deregulation, impacting not just financial services but other industries like automobile manufacturing.

Questions & Answers

Q: What is the main objective of the Trump administration's review of Dodd-Frank?

The main objective is to enhance bank lending to small and medium-sized businesses by easing capital retention requirements and reducing regulatory costs. This is seen as vital for job creation and economic growth, as these businesses are considered major job creators. The administration aims to achieve this while maintaining smart regulations.

Q: How does Gary Cohn view the role of Congress in the deregulation process?

Gary Cohn views Congress as a valuable partner in the deregulation process, although he notes that significant changes can be made without full reliance on Congress. Both the House and Senate have shown interest in reforming regulatory processes, and their collaboration is seen as beneficial in enhancing the effectiveness of the administration's efforts.

Q: What is the administration's stance on the Volcker Rule?

The administration is considering simplifying the Volcker Rule rather than repealing it entirely. This aligns with Treasury Secretary Mnuchin's stance. The focus is on maintaining smart regulations that allow for a highly functional and competitive financial market, while ensuring that banks can lend effectively and support economic growth.

Q: Why does Cohn emphasize the need for smart regulation?

Cohn emphasizes smart regulation to ensure that financial markets and institutions are well-regulated yet functional and competitive. The aim is not to eliminate regulations but to strike a balance that supports economic growth by allowing banks to lend more freely while maintaining a robust and transparent financial system.

Q: What are the perceived effects of Dodd-Frank on banks, according to Cohn?

According to Cohn, Dodd-Frank has forced banks to hoard capital and has imposed significant regulatory costs, hindering their ability to lend to small and medium-sized businesses. This has negatively impacted job creation and economic growth, prompting the administration to review and potentially modify these regulations.

Q: How does the administration plan to maintain the U.S.'s competitive advantage in financial services?

The administration plans to maintain the U.S.'s competitive advantage by preserving deep, liquid, and transparent markets. This involves implementing smart regulations that ensure financial markets are well-regulated yet functional, allowing the U.S. to remain a leader in the global financial services industry.

Q: What industries, besides financial services, are mentioned in the context of deregulation?

Besides financial services, industries such as automobile manufacturing are mentioned in the context of deregulation. The administration aims to reform regulatory processes across various industries, reducing burdensome regulations to enhance job creation and economic growth.

Q: What is the administration's overall approach to regulation, as stated by Cohn?

The administration's overall approach to regulation, as stated by Cohn, is not anti-regulation but seeks to implement smart, effective regulations that support a highly functional and competitive market. The focus is on reducing unnecessary regulatory burdens while maintaining well-regulated financial institutions and markets.

Summary & Key Takeaways

• Gary Cohn discusses the Trump administration's efforts to modify Dodd-Frank regulations, aiming to enhance bank lending to small and medium-sized businesses. The focus is on easing capital retention requirements and reducing regulatory costs, while maintaining smart regulation and competitive financial markets.

• The administration seeks collaboration with Congress to achieve these regulatory reforms, although significant changes can be made independently. Cohn highlights the importance of preserving deep, liquid, and transparent markets, ensuring the U.S. remains a leader in financial services.

• The Volcker Rule, which limits banks' speculative investments, is under review for potential simplifications. Cohn emphasizes that the administration is not anti-regulation but aims for a balance that supports well-regulated, functional banks and markets, fostering economic growth.