Summary: 4 orders that affect the financial institution regulators

Since his inauguration day Jan. 20, President Donald Trump has signed four executive orders or memoranda that have a direct impact on federal financial institution regulators. Here’s a summary of what the orders/memos stated, the impact, and what actions the regulators have taken (so far) in response to the actions:

Jan. 20: An order (memorandum) imposing a freeze on new regulations for 60 days

  • For the most part, the federal financial institution regulatory agencies are “independent agencies,” typically free from such orders. Legal analysts have pointed to past such freezes (which are not unusual at the start of a new administration) noting that “Presidential regulatory memoranda have typically excluded these independent regulatory agencies.
  • Additionally, legal analysts have noted that the Trump order only applies to executive departments and agencies, and not independent agencies (which makes up most of the financial regulators).
  • However, the language of the memo does not specifically exempt the financial regulators (unlike some orders in the past).
  • Only one financial institution regulator – the National Credit Union Administration – has publicly asserted its independence. In a Jan. 31 statement, the agency declared: “NCUA has reviewed the January 20 memorandum from the White House Chief of Staff on a regulatory freeze and has determined that, as the agency is an independent federal financial regulator, it does not apply. NCUA will nonetheless adhere to its spirit,” said NCUA Spokesman John Fairbanks in the statement.
  • So far, none of the other financial institution regulatory agencies – CFPB, Federal Reserve, FDIC, OCC – have made similar public declarations.
  • Text of Trump regulation freeze order

Jan. 23: An order imposing a hiring freeze for some federal government workers — excluding the military — to shrink the size of government

  • Like the regulatory freeze, some analysts have argued that the independent status of the financial institution regulators exempts them from the order.
  • Joint guidance about the hiring freeze was issued Jan. 31 by the federal Offices of Management and Budget (OMB) and Personnel Management (OPM).
  • The “Memorandum: Federal Civilian Hiring Freeze Guidance” notes that the administration’s order applies to all executive departments and agencies “regardless of the sources of their operational and programmatic funding and to all types of Federal civilian appointments, regardless of the length of the appointment, except as provided for below or otherwise provided in law.”
  • While the memorandum does outline 18 specific exemptions from the freeze (for example, “hiring by the U.S. Postal Service”), no mention is made of independent agencies, such as the federal financial institution regulators.
  • Two financial institution regulators – the Federal Reserve and the OCC – have said they would comply with the order.
  • The credit union regulator, NCUA, said it is still reviewing the memo.
  • The impact on CFPB, still seeking a review of the court decision from last fall, is unclear: the court ruled that CFPB will operate as an executive agency. However, that ruling is at odds with the statute creating the agency, which lists CFPB as an “independent regulatory agency.”
  • FDIC has said nothing publicly about the freeze.
  • Memorandum: Federal Civilian Hiring Freeze Guidance
  • Presidential Memorandum Regarding the Hiring Freeze

Jan. 30: An order instructing agencies that whenever they introduce a regulation, they must first abolish two others

  • The order includes no exemption for financial institution regulators – and initially seemed to include them.
  • However, the same day that the order was issued, news reports stated that the White House had confirmed that the order does not apply to independent agencies.
  • Also, under the order, the director of the Office of Management and Budget (OMB) would have the power to exempt any other category of regulations.
  • Interim guidance dated Feb. 2 indicates independent agencies are not covered under the order (guidance signed by Dominic J. Mancini, Acting Administrator, Office of Information and Regulatory Affairs/OMB).
  • White House Order: Reducing Regulation and Controlling Regulatory Costs
  • Interin Guidance from OMB’s OIRA on 1-for-2 (Feb. 2)

Feb. 3: An order directing the Treasury secretary to review the 2010 Dodd-Frank financial regulatory law

  • The order includes six “core principles” for regulating the U.S. financial system.
  • The sixth principle in the list calls for restoring public accountability within federal financial regulatory agencies and rationalizing the federal financial regulatory framework.
  • However, the 399-word order provides no more details about “restoring public accountability” or “rationalizing” the federal financial regulatory agencies and framework.
  • Budget analysis issued Feb. 7 (by Acting OMB Director Mark Sandy) asserts that implementing the order would have a de minimus impact on both the costs and revenues to the federal government, as well as mandatory and discretionary obligations and outlays. Sandy’s analysis covers the “5-fiscal year period” beginning in 2017. “The agencies anticipated to be impacted by this executive order include the Department of the Treasury and member agencies of the Financial Stability Oversight Council,” the analysis states.
  • Presidential Executive Order on Core Principles for Regulating the United States Financial System
  • Budgetary Impact Analysis for Executive Order Entitled “Core Principles for Regulating the U.S. Financial System”