The executive body of the European Union warned against any rollback of the Dodd-Frank Act, according to a report by Law360.
European Commission spokesperson Vanessa Mock said they are studying the executive order issued by President Donald Trump on Friday, which ordered the Secretary of the Treasury to review Dodd-Frank ahead of any attempts to modify the law.
Mock said senior figures inside the commission believe changes to the law could cause unrest or even destroy the international regulatory framework for bank standards, the nonbinding rules known as Basel III.
“Our view is that international cooperation is vital in the area of financial regulation,” commission spokeswoman Vanessa Mock said. “We want to see this continue, and this would be our message to the newly appointed U.S. administration.”
Valdis Dombrovskis, vice president of the commission and portfolio holder for financial stability, tweeted his dismay at possible rollbacks to Dodd-Frank.
“International regulatory cooperation was vital for effective response to the financial crisis and should continue,” he said. “No financial stability = no growth #EU #US.”
Trump cannot completely dismantle Dodd-Frank on his own via executive order. Former U.S. Representative Barney Frank (D-Massachusetts) said Friday in an interview with DS News that Trump would have to pass any substantive Dodd-Frank reform through Congress-an unlikely prospect, he said.
“Financial reform is very popular,” Frank said. “When the Republicans were in power under President Obama, they kept voting to repeal the healthcare bill entirely but they never put the vote to the floor to repeal financial reform because the public supports financial form.
“He’s not going to get this through the Congress, I believe,” Frank said.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Trump’s order is similar to his bill, the Financial CHOICE Act, which he introduced last year as an alternative to Dodd-Frank.
The bill included provisions to allow banks to escape capital, leverage and liquidity requirements required by the Basel III international banking accords, and instead to allow them to abide by a 10 percent leverage ratio.