President Trump’s early efforts to bring legislative change to America make it a little difficult to look across the Atlantic and feel totally at ease. For example, with one flourish of his Presidential pen he appears hell-bent on repealing the Dodd-Frank Act which was introduced in 2010 to bring order out of the chaos that followed the global banking meltdown of 2008. If Mr Trump has his way, the widely-held fear is that it will unleash once again the dark forces that almost brought the house down and left the US staring into the abyss of full-scale depression.
Needless to say, US bank share prices took off in recognition of the prospect of a shackle-free future, proving yet again that greed is a great healer.
Like most new rules put in place to counter a particular set of circumstances, Dodd-Frank was not perfect; laws designed to keep the wolves of Wall Street in check had the unfortunate side-effect of hitting the innocent Community Banks, too. So, rather than simply amend the rules to keep the best bits of Dodd-Frank in place – such as the Consumer Financial Protection Bureau and the rule that meant the banks had to write ‘living wills’ in the event of a run-off – the mood seems to be to dismantle the whole lot and return to the Wild West in the quest for future profit and economic prosperity.
Oh to be a fly on the wall in the offices of the Bank of England and the Prudential Regulation Authority. Having got most of the chastened UK banks back on to a relatively even keel, we can only hope that what could happen in America is, just for once, not a precursor of what could happen here. It would be ironic if, just as the P2P sector is facing the prospect of tighter regulations to protect consumers this summer, the banks were to be given the freedom once again to monopolise the financial market place. With luck, common sense will prevail on both sides of ‘the pond’.