Analysis: With quick fixes, Biden’s agencies are reversing Trump’s Wall Street-friendly rules

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© Reuters. FILE PHOTO: FILE PHOTO: The Wall Street sign is pictured on the New York Stock Exchange (NYSE) in the Manhattan neighborhood of New York City

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From Katanga Johnson

WASHINGTON (Reuters) – U.S. President Joe Biden’s Interim Regulators are wasting no time using quick legal tactics to expose the Wall Street-friendly measures put in place under former Republican President Donald Trump.

They sparked or stalled more than a dozen controversial Trump-era measures that critics said undermined consumer protection, weakened enforcement and limited investors’ ability to respond to environmental, social and governance changes (ESG) to push.

Instead of embarking on the lengthy process of recasting the rules, the agencies have deployed quick legal tools in many cases, according to lawyers, consumer groups and a review by Reuters. This includes delaying incomplete rules, issuing informal guidelines, repealing old or new policy statements, and deciding not to enforce existing rules.

The rapid changes have set alarm bells in the financial industry, which must adapt quickly to the tougher new regime, and set the stage for potential legal challenges, lobbyists and lawyers said.

“The provisional democratic leadership of these agencies is moving very quickly to address the deregulatory political changes that occurred under Trump,” said Quyen Truong, partner at the law firm Stroock & Stroock & Lavan.

“Agencies’ use of guidelines and policy reversal require quick compliance for companies.”

During the previous administration, Trump-appointed regulators relaxed dozens of rules that they said were out of date and hurt jobs.

With a slim majority in Congress, Democratic lawmakers will struggle to overturn these rules while delays arise. Https://www.reuters.com/article/us-usa-biden-cabinet/biden-plans-to-appoint-interim-agency- heads-during-confirmation-process-idUSKBN29I047 for the change of president has many candidates almost three months confirmed on confirmation.

That has compelled interim officials to implement Biden’s agenda to help Americans recover from the pandemic and tackle social injustice and climate change.

For example, acting chairman of the Securities and Exchange Commission (SEC), Allison Lee, has been very active. It has restored the power of law enforcement officers, who were deprived of them in 2017, to open probes without getting approval from senior executives, and reversed a 2019 policy that critics say is too easy for companies that break the rules had made to continue their business habitually.

It has also begun to reverse the Trump administration’s attack on ESG investing with fresh efforts. Https://www.reuters.com/article/us-usa-sec-climate-change-analysis/analysis-why-bidens-securities-regulator -gesichter-klimarazzia-challenges-idUSKBN2B919L on misleading disclosure of ESG by the police.

The SEC said every decision was made with a view to ensuring “seamless guidance” in its mission to protect investors.

The Ministry of Labor also announced last month that it would not enforce rules at https://www.reuters.com/article/us-usa-labor-esg/us-labor-department-will-not-enforce-trump-era-investment -idUSKBN2B22GD Two rules finalized in the last few months of the Trump administration that restricted investment and shareholder votes based on ESG factors. The agency did not respond to a request for comment.

And Acting Director of the Consumer Financial Protection Bureau (CFPB) Dave Uejio did not disappoint progressives, who hoped he would set guidelines that they said would undermine fair lending.

“We’re taking a close look at previous policies that undermined the Bureau’s effectiveness while working non-stop through oversight and enforcement to ensure that financial institutions treat consumers fairly,” said Uejio.

He has revoked policies that undermined the agency’s ability to punish companies for “abusive” behavior and that limited the regulator’s power to tell companies what to do.

This month Uejio postponed https://www.reuters.com/article/us-usa-cfpb-debt-collection/us-consumer-watchdog-seeks-delay-on-pair-of-debt-collection-rules-idUSKBN2BU2WD New collection rules consumer groups said did more harm than good, while Reuters reported https://www.reuters.com/article/usa-consumers-credit-scores/fixing-the-credit-catch-22-how -biden-will-make-credit-scores-fairer-idUSL1N2LT061, which the CFPB is currently revising to revise the country’s credit reporting system.

Uejio said he plans to focus on further COVID-19 relief and racial justice efforts.

“We’ve already seen financial agencies, especially the consumer watchdog, scrutinizing some of the worst policies of the Trump era,” said Ed Mierzwinski of consumer protection group PIRG.

PUSHBACK

However, Republicans say the changes could create legal uncertainty and prompt companies to withdraw from lending. US Senator Pat Toomey, the top Republican on the Congressional body that oversees the financial agencies, said in a statement that the changes would “slow economic growth.”

A hasty reversal of rules and guidelines without a formal review process could lead to litigation, said Brian Johnson, partner at Alston & Bird and former associate director of CFPB.

Still, lawyers said they advised clients to adapt quickly as permanent candidates are unlikely to change course.

“Consumers cannot wait for help,” said Uejio. “You need us now.

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