Elizabeth Warren warns of Trump financial reforms that shake up the 5 key pillars of bank regulation.

Dan Rochefort

2017-11-19 08:37:00 Sun ET

In 2000, a former law professor at Harvard proposed establishing the Financial Product Safety Commission in order to protect consumer rights in the provision of financial products and services. A decade later, that law professor, Elizabeth Warren, witnessed the congressional approval of the 2010 Dodd-Frank Act and the resultant new regulatory agency, the Consumer Financial Protection Bureau, which aims to restore trust in financial institutions with 5 major pillars of financial regulation: capital adequacy rules, leverage limitations, liquidity requirements, macroprudential stress tests, and deposit insurance constraints.

"It is impossible to buy a toaster that has a 1-in-5 chance of bursting into flames and burning down a house, but it is possible to refinance a current home with a mortgage that has the same 1-in-5 chance of putting the family out on the street," Warren wrote in the first paragraph in her influential Democracy article. Maybe a toaster or a financial product or service is so defective that consumers should not be thrown back on themselves to avoid it. Conversely, consumers with more confidence in financial products or services are more likely to purchase them.

These paternalistic considerations offer insights into the Trump administration's plan to dismantle much of the Dodd-Frank Act, especially the bank capital rules and stress tests. The law of inadvertent consequences counsels caution.

 


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Ivanka Trump softens her father's brash and combative image with a social agenda toward female empowerment.

Fiona Sydney

2017-06-09 06:37:00 Friday ET

Ivanka Trump softens her father's brash and combative image with a social agenda toward female empowerment.

To complement President Trump's pro-business economic policies such as low taxation, new infrastructure, greater job creation, and technological in

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President Donald Trump releases his plan to slash income taxes for U.S. citizens and corporations.

Jacob Miramar

2017-09-03 10:44:00 Sunday ET

President Donald Trump releases his plan to slash income taxes for U.S. citizens and corporations.

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Tech titans from Apple and Amazon to Microsoft and Google can benefit from the G.O.P. tax reform.

James Campbell

2017-12-07 08:31:00 Thursday ET

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Incoming New York Fed President John Williams suggests that it is about time to end forward guidance.

Becky Berkman

2018-05-13 08:33:00 Sunday ET

Incoming New York Fed President John Williams suggests that it is about time to end forward guidance.

Incoming New York Fed President John Williams suggests that it is about time to end forward guidance in order to stop holding the financial market's han

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JPMorgan Chase CEO Jamie Dimon sees great potential for 10-year government bond yields to rise to 5%.

Olivia London

2018-08-05 12:34:00 Sunday ET

JPMorgan Chase CEO Jamie Dimon sees great potential for 10-year government bond yields to rise to 5%.

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Peter Thiel shares his money views of President Trump, Facebook, Bitcoin, global finance, and trade.

Apple Boston

2018-03-05 07:34:00 Monday ET

Peter Thiel shares his money views of President Trump, Facebook, Bitcoin, global finance, and trade.

Peter Thiel shares his money views of President Trump, Facebook, Bitcoin, global finance, and trade etc. As an early technology adopter, Thiel invests in Fa

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