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Bowen Warns of “Reckless” Dodd-Frank Repeal

Sharon Bowen, commissioner at the US Commodity Futures Trading Commission (CFTC), warned that it could prove “reckless” to repeal Dodd-Frank, despite calls from Donald Trump to do so while he was campaigning for the presidency.

Speaking at the 2017 Brodsky Family Northwestern JD-MBA Lecture Series, Bowen acknowledged that the regulatory agenda under a Trump presidency is likely to be very different compared to when she joined the commission almost three years ago.

“When I first became a commissioner, it was with the expectation that the CFTC would continue its mission, established by long-standing laws and reaffirmed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to more aggressively regulate the markets, in the hopes of protecting investors and warding off another financial crisis,” she said.

However, Bowen stated that “the mood in Washington has generally shifted” and the Trump administration appears likely to “usher in discussions of deregulation”.  

She highlighted that there is talk of undoing certain Dodd-Frank rules, noting that Trump had even called for Dodd-Frank to be repealed in its entirety while campaigning last year. 

In addition, Bowen said that there are a “myriad of other regulations across the government” that could potentially be repealed under the current administration.

Although Bowen declined to predict whether all or some of these regulatory changes will actually occur, on the basis that “people making predictions haven’t covered themselves in glory over the last year”, she did claim that it would be detrimental to the US economy to repeal the Dodd-Frank provisions.

“I will state that I remain a firm believer in Dodd-Frank and in the mission of the CFTC, and I think it would be shortsighted, even reckless, to repeal these crucial reforms and put the American economy, workers, investors and everyone else at the risk of repeating the mistakes that brought us the financial crisis. It is my hope that the new Trump Administration comes to appreciate the importance and necessity of strong financial regulation,” said Bowen.

Profit & Loss‘ analysis on the impact of a Trump administration on financial services regulation can be accessed here.

Galen Stops

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