On February 3, 2017, President Donald Trump signed an Executive Order1 establishing the Trump Administration's "Core Principles" for regulating the United States financial system. The Core Principles seek to:

  1. empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement and build individual wealth;
  2. prevent taxpayer-funded bailouts;
  3. foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry;
  4. enable American companies to be competitive with foreign firms in domestic and foreign markets;
  5. advance American interests in international financial regulatory negotiations and meetings; and
  6. restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

The Executive Order directs the Secretary of the Treasury to consult with the heads of the member agencies of the Financial Stability Oversight Council and to report to the President within 120 days (and periodically thereafter) on the extent to which existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other government policies promote the Core Principles, as well as what actions have been taken, and are currently being taken, to promote and support the Core Principles. The report to the President should also identify any of the above items that "inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles."

President Trump's Executive Order provides a framework for comprehensive change to current financial regulation, and if legislation reflecting that framework is passed by Congress, it could lead to a significant scaling back of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Although much of the language of the Core Principles is general, several provisions suggest possible directions that the Trump Administration might take. For example, Principle (b) may be addressing the "too big to fail" dilemma, possibly by modifications to Title II of the Dodd-Frank Act and its "Orderly Liquidation Authority" and related regulations. Principle (c) suggests that economic concepts like systemic risk, moral hazard and information asymmetry could be considered in different ways, perhaps with reference to how regulatory cost/benefit analysis should be carried out. Principle (e) echoes previous views that the Trump Administration may recalibrate the way in which U.S. banking regulators participate in international bodies like the Basel Committee on Banking Supervision and the Financial Stability Board.

 1 Available at https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states.

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