President Trump’s wants to weaken, if not eliminate, the Dodd-Frank Act; and he wants to remove the requirement that financial brokers act as fiduciaries when advising clients making investment decisions. During the housing bubble, financial services firms benefitted by allowing homeowners with unsound financial situations to buy homes by taking out subprime mortgages they would not be able to service. In the lead up to the crisis, financial services firms collected large fees related to those mortgages, and greatly magnified those fees by trading associated financial derivatives. I suggest that President Trump’s plan will set a future crisis in motion. Of course, both are major figures in the financial services industry; and spearheading the President’s plan is Gary Cohn, formerly of Goldman Sachs but now White House National Economic Council Director.

Source: Forbes February 05, 2017 16:41 UTC