CEOs could be forgiven for fearing that key parts of Donald Trump’s policy agenda are now more vulnerable to failure, following a tumultuous week that saw the president expend political capital with his controversial handling of Russian relations.
A key plank of his pledge to lighten regulation on business is a “dismantling” of the Dodd-Frank rules governing the banking sector. But even one of the Republican Party’s more circumspect figureheads, Senate Majority Leader Mitch McConnell, said yesterday that the overhaul is under a cloud.
“I’d love to do something about Dodd-Frank, particularly with regard to community banks, but that would require Democratic involvement,” McConnell told Bloomberg News. “I’m not optimistic.”
The comment came as JPMorgan Chase CEO Jamie Dimon stepped up his call for the rules to be altered, though he stopped short of recommending they be scrapped completely.
“We are not looking to throw out the entirety of Dodd-Frank and other rules. It is, however, appropriate to open up the rule book … and rework rules and regulations that don’t work well or are unnecessary.”
“We are not looking to throw out the entirety of Dodd-Frank and other rules,” Dimon told the bank’s annual shareholder meeting. “It is, however, appropriate to open up the rule book in the light of day and rework rules and regulations that don’t work well or are unnecessary.”
It always was going to be tough for the administration to pass an overhaul of the regulations, though events in Washington this week could make that task even harder. “I think we could do with a little less drama from the White House on a lot of things so we can focus on our agenda, which is deregulation, tax reform, repealing and replacing Obamacare,” McConnell said.
Republicans only hold a slim 52-to-48 majority in the Senate and would likely need 60 votes to pass a Dodd-Frank repeal, implying a need for some bipartisan support.
Democrats reubuffed McConnell’s claims that they were opposed to easing the regulatory burden on community banks. Rather, they are concerned about the potential relaxing of rules that have forced Wall Street to rein in risk-taking.
In a recent survey conducted by peer group Business Roundtable, CEOs nominated regulatory reform as the second-best way to create an environment to drive economic growth, behind tax cuts.
But even the tax element of Trump’s agenda is looking shakier, according to influential investment strategist Byron Wien.
“At the beginning of the year, I thought the Trump pro-growth program was propelling the market,” Wien, who is vice chairman of private wealth at Blackstone, told CNBC. “Now, we have a situation where it looks like he’ll get very little of his pro-growth agenda through, but earnings are coming in better than expected, and that’s driving the market higher.”