Treasury Report Calls for Sweeping Changes to Financial Rules

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The New York Times |

The Trump administration is again taking aim at the Dodd-Frank Act, releasing a Treasury Department report on Friday that recommended a vast reworking of Wall Street rules adopted in response to the financial crisis.

Some of the proposed overhauls would do away with a requirement for companies to divulge the pay ratio of chief executives to workers, streamline derivatives rules, and give companies more access to capital and investors more places to put their money.

The ideas were welcomed on Wall Street, where banks complain that Dodd-Frank rules have needlessly hobbled growth. But they attracted skepticism from consumer groups and others, who consider the suggestions a dangerous relaxation of checks against a cavalier financial system.

The report offers a guide to agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, which police activity relating to stocks, bonds and derivatives. But the detailed 220-page document also serves as a gauge of the administration’s attitude toward Wall Street — namely, that market restraints should be loosened.

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The proposals follow a report on banking rules released by Treasury officials in June. That report sought to weaken the Consumer Financial Protection Bureau, lighten regulatory scrutiny of small community banks and allow greater exemptions from the so-called Volcker Rule, which bars banks from making speculative bets for their own gain.

Both the June report and the one released on Friday — as well as two more expected in the coming months — originated from an executive order that President Trump signed in February asking Treasury Secretary Steven Mnuchin to reposition financial rules to better match the administration’s aims.

“The U.S. has experienced slow economic growth for far too long,” Mr. Mnuchin said in a statement Friday. “By streamlining the regulatory system, we can make the U.S. capital markets a true source of economic growth which will harness American ingenuity and allow small businesses to grow.”

Rob Nichols, chief executive of the American Bankers Association, called the Treasury recommendations “practical, reasonable and achievable.”

“Many of the recommendations in the report would make it easier to raise capital, meet the needs of bank customers operating domestically and abroad, and focus regulatory processes on effective supervision without harming the economy,” Mr. Nichols said in a statement.

Among its proposals, Treasury recommended increasing the amount that can be raised in a crowdfunding offering, to $5 million from $1 million. The department, which also said it hoped to encourage more companies to pursue initial public offerings, pointed out that the number of publicly traded companies had declined by nearly 50 percent in the past two decades.

Treasury also addressed rules that require companies to disclose payments associated with foreign resource extraction and the presence of “conflict minerals” from war-racked regions in Africa in their products. It said the rules, which are backed by human rights groups, should be repealed or limited to large, mature companies.

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