The U.S. Department of the Treasury (Treasury) has released its first in a series of reports setting out recommendations to “simplify and reduce regulatory costs and burdens” in the financial services industry. The report responds to President Trump’s Executive Order 13772, “Core Principles for Regulating the United States Financial System”, which instructs the agency to identify regulatory requirements that inhibit Federal regulation of the U.S. financial system in a manner consistent with the Core Principles. This first report is directed toward depository institutions; three additional reports, expected to be released in the fall, will focus on recommendations for capital markets, asset management, insurance, retail and institutional investment products and vehicles, nonbank financial institutions, financial technology, and financial innovation.
Like the Financial CHOICE Act of 2017, which passed the House of Representatives on June 8, 2017, the Treasury’s report calls for a “pull-back” of regulatory requirements, many of which were enacted as part of Dodd-Frank. The Treasury’ recommendations, however, differ in two key respects: 1) Many can be attained through regulatory policy actions rather than legislation; and 2) Many make changes at the edges of existing requirements rather than seek wholesale change.
Treasury states that it will begin working with Congress, independent regulators, the financial industry and trade groups to implement the recommendations advocated in its report. Nevertheless, it may take many months to accomplish. The industry anticipates that none of the additional reports laying out recommendations for the financial services industry will be released before the beginning of September. Adding to that, any regulatory changes implemented through the notice and comment process may take more than a year, leaving firms to continue compliance with existing requirements for some time to come.
We invite you to read through the Alert for a more complete discussion of the Treasury’s Report and recommendations.