President-elect Donald Trump has said that he wants to dismantle the Dodd-Frank Act of 2010, the financial reform legislation that was passed by the Obama administration in the aftermath of the 2008 financial crisis.
Republicans have criticized Dodd-Frank, which was named for the two Democratic congressman who worked on the law, then Senate Banking Committee Chairman Chris Dodd of Connecticut and then Financial Services Committee Chairman Barney Frank of Massachusetts.
"It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs, and that has to stop," Trump told Reuters in May.
But at a joint economic committee hearing on the U.S. economic outlook, Federal Reserve Chief Janet Yellen said, "I think Dodd-Frank was very important in fostering those changes, and we should feel glad our financial system is now operating on a safer and sounder footing."
Dismantling all or part of Dodd-Frank could be done with the help of Rep. Jeb Hensarling (R-Texas), the chairman of the House Financial Services Committee.
Hensarling is under consideration to be Trump's Treasury secretary, though nothing is confirmed yet, according to Bloomberg.
On Sept. 13, Hensarling introduced a replacement bill called the Financial CHOICE Act that could serve as a template for getting rid of or chipping away at Dodd-Frank.
Here are three ways that the financial system could be affected if Dodd-Frank goes the way of the dodo.
1. Community Banks
Dismantling Dodd-Frank could help community banks, which have found it difficult to spread huge compliance costs over a limited asset base. This has put them at an increasing competitive disadvantage by comparison with larger banks.
On Trump's transition website, Dodd-Frank was cited as the reason for the disappearance of many community banks.
"The big banks got bigger, while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed 'too big to fail,'" according to the website.