One of President Trump's most eye-opening executive orders was to start the process of repealing the Dodd-Frank financial reform bill, enacted in 2010 to issue new, tighter regulations for the banking and finance industry. A memorandum announcing the moves was issued by the White House last week.
"We expect to be cutting a lot out of Dodd-Frank," Trump said, in announcing the move. "I have so many people, friends of mine, with nice businesses, they can't borrow money, because the banks just won't let them borrow because of the rules and regulations and Dodd-Frank."
In the memorandum, Trump also promised to do away with the Department of Labor's fiduciary rule, which sought to force more transparency - especially on fees - in the financial advisory sector.
With both Dodd-Frank and the DOL rule very much in doubt, how should money managers discuss the situation with financial clients? Very carefully, experts say - and in real world terms.
"From the client side, I don't anticipate there being much of an impact," says Lawrence Kaplan, a bank regulatory and payments attorney at Washington, D.C.-based Paul Hastings. "Bank customers need to be aware of deposit insurance limits, as fewer 'cops on the beat' to regulate market actors has historically led to failures down the road."
"As far as having an impact on the markets, there likely will be fewer dollars being allocated to compliance, freeing up capital for banks to lend and invest," Kaplan adds. "However, state laws are not impacted by changes to Dodd-Frank, which will prevent wholesale gutting of compliance departments."