Treasury Report on Changes to Dodd-Frank

In response to Executive Order 13772 on Core Principles for Regulating the U.S. Financial System, February 3, 2017, the U.S. Treasury (the “Treasury”) issued its first report on June 12, 2017, entitled “A Financial System that Creates Economic Opportunities:  Banks and Credit Unions” (the “Report”) and a press release.  The lengthy Report recommends extensive changes in Dodd-Frank and related laws and regulations governing the financial services industry.  These include, for example: (i) simplification of capital, liquidity and leverage rules, (ii) liquidity improvement and (iii) reform of the Consumer Financial Protection Bureau.  Treasury Secretary Steven Mnuchin has been quoted as saying some 80% of the changes can be made by the Executive Branch without adoption of statutory changes, and 20% require statutory changes.  The Report gets broad support for recommendations reducing regulatory burdens without increasing risks, but other changes are more controversial in that they are said by critics to increase risks, like changes to the calculation and implications of the leverage ratios.