WASHINGTON: Presi­dent Donald Trump is directing Treasury Secretary Steven Mnuchin to begin two new reviews of banking rules, wading deeper into a deregulation effort that the White House has promised will gut Obama-era regulations on Wall Street.

The first new review directs Treasury to look at a process known as “orderly liquidation review,” which was set up by the 2010 Wall Street regulation law Dodd-Frank to create a process for winding down a large, failing financial company in a way that protects taxpayers from large bailouts such as the ones paid out in the aftermath of the 2008 financial crisis.

The second ordered review will look at a separate part of the Dodd-Frank law that called on federal regulators to identify which financial institutions were large enough to merit enhanced regulation, as their collapse could destabilise the economy as a whole. This provision was a direct response to the collapse of Lehman Brothers in 2008, as well as taxpayer funded efforts to bail out several other large faltering companies.

There are now three separate reviews of banking rules — Trump also asked Mnuchin for a separate, broader review in February — but the White House’s steps so far have been uneven, leaving many to question its approach and strategy.

Administration officials have signalled they want to crack down on Wall Street, but some of the steps they have taken so far suggest they will be clearing back Wall Street regulations. And after blasting Goldman Sachs during the campaign, Trump has picked several Goldman Sachs veterans for senior roles in his administration. Adding to the confusion, the White House has identified specific regulations that it says are impeding lending but not moved to undo them.

Meanwhile, House Republicans are hoping to vote in May on a new plan to roll back much of Dodd-Frank. The first Treasury Department review of banking regulations won’t be submitted to the White House until June, and these two new reviews won’t be complete until even later in the year.

Bloomberg-The Washington Post Service

Published in Dawn, April 23rd, 2017