Analysis: With quick fixes, Biden's agencies reverse Trump's Wall
Send a link to a friend
[April 12, 2021]
By Katanga Johnson
WASHINGTON (Reuters) - U.S. President Joe
Biden's interim regulators are wasting no time unraveling Wall
Street-friendly measures introduced under former Republican President
Donald Trump, using quick-fix legal tactics.
They have spiked or stalled more than a dozen contentious Trump-era
measures that critics said eroded consumer protections, weakened
enforcement, and curbed investors' ability to push for environmental,
social and governance (ESG) changes.
Rather than embarking on the lengthy process of rewriting the rules, the
agencies have in many instances used speedy legal tools, according to
lawyers, consumer groups, and a review by Reuters. These include
delaying unfinished rules, issuing informal guidance, rescinding old
policy statements or issuing new ones, and choosing not to enforce
The swift changes have set off alarm bells in the financial industry,
which is having to adapt quickly to the tougher new regime, and set the
stage for potential legal challenges down the road, said lobbyists and
"The interim Democratic leadership for these agencies are moving very
quickly to tackle the deregulatory policy shifts that occurred under
Trump," said Quyen Truong, partner at law practice Stroock & Stroock &
"The agencies' use of guidance and reversal of policy statements demands
a quick turnaround of compliance for firms."
During the previous administration, Trump-appointed regulators eased
dozens of rules they said were outdated and hurt jobs, drawing ire from
Democrats who said the changes saved Wall Street billions of dollars
while increasing risks and hurting consumers.
With a slim majority in Congress, Democratic lawmakers will struggle to
repeal those rules, while delays to the presidential transition
has left many nominees still awaiting confirmation nearly three months
That has put the onus on interim officials to start executing Biden's
agenda to help Americans recover from the pandemic and to tackle social
injustice and climate change.
Acting Securities and Exchange Commission (SEC) chair Allison Lee, for
example, has been very active. She has returned power to senior
enforcement staff, who had it stripped from them in 2017, to open probes
without seeking senior approvals, and has reversed a 2019 policy that
critics said made it too easy for companies that broke the rules to
continue with business as usual.
She has also begun to reverse the Trump administration's assault on ESG
investing with a new effort to police misleading ESG disclosures.
The SEC said every decision was made with a view to ensuring "seamless
leadership" in its mission to protect investors.
Likewise, the Department of Labor last month said it would not enforce
two rules finalized in the last months of the Trump administration which
curbed investments and shareholder votes based on ESG factors. The
agency did not respond to a request for comment.
[to top of second column]
The Wall Street sign is pictured at the New York Stock exchange
(NYSE) in the Manhattan borough of New York City, New York, U.S.,
March 9, 2020. REUTERS/Carlo Allegri
And acting Consumer Financial Protection Bureau (CFPB) director Dave
Uejio has not disappointed progressives who hoped he would fix
policies they said undermined fair lending.
"We are taking a close look at previous policies that hampered the
Bureau's effectiveness and simultaneously working nonstop through
supervision and enforcement to ensure financial institutions are
treating consumers fairly," Uejio said.
He has revoked policies that had undermined the agency's ability to
punish companies for "abusive" behavior, and which had curtailed the
supervisory department's power to tell companies what to do.
This month, Uejio delayed https://www.reuters.com/article/us-usa-cfpb-debt-collection/u-s-consumer-watchdog-seeks-delay-on-pair-of-debt-collection-rules-idUSKBN2BU2WD
new debt collection rules which consumer groups said would do more
harm than good, while Reuters has reported https://www.reuters.com/article/usa-consumers-credit-scores/fixing-the-credit-catch-22-how-biden-wants-to-make-credit-scores-fairer-idUSL1N2LT061
that the CFPB is exploring overhauling the country's credit
Uejio said he plans to focus on more COVID-19 relief and racial
"We've already seen financial agencies, most notably the consumer
watchdog, take the hatchet to some of the worst Trump-era policies,"
said Ed Mierzwinski of consumer advocacy group PIRG.
Republicans, though, say the changes create legal uncertainty and
could cause companies to pull back from lending. U.S. Senator Pat
Toomey, the top Republican on the Congressional panel that oversees
financial agencies, said in a statement that the changes would "slow
And hastily reversing rules and policies without going through a
formal review process could risk litigation, said Brian Johnson, a
partner at Alston & Bird and formerly CFPB deputy director.
Still, lawyers said they were advising clients to adapt quickly, as
permanent appointees were unlikely to change course.
"Consumers cannot wait for help," said Uejio. "They need us now.
(Reporting by Katanga Johnson in Washington; Editing by Michelle
Price and Matthew Lewis)
[© 2021 Thomson Reuters. All rights
Copyright 2021 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.