The government shutdown, which is now the longest in modern history, is hurting President Donald Trump’s deregulation plans in the financial services industry.
According to a report in Reuters, with the Democrats controlling the House of Representatives and the upcoming 2020 presidential election expected to blunt any legislation, industry lobbyists are concerned that if the shutdown continues, there will be little time for the White House’s new rules to go into effect.
President Trump has laid out plans to ease the rules on banks, transform corporate governance and drive financial innovations, which led many executives in the industry to start to reap the benefits this year. But with the partial government shutdown, they aren’t so sure.
As Reuters noted, one area that is concerning executives is the rules that are currently being drafted by regulators, which will put into place the changes Congress passed in May to lift the restrictions on banks. Republican lawmakers had expected the changes would almost be complete, but several have not reached the public comment stage, a phase that is required under federal law and can’t be easily fast-tracked. The changes face a lot of opposition from consumer groups, and anything that hurts the ability for them to be implemented could result in financial services companies being exposed to litigation.
“While there is an image of folks coming in and cutting red tape, for better or worse that is not the way our legal process works, and the government shutdown really impedes that process,” said Ben Olson, a lawyer with Buckley Sandler, in the Reuters report.
Take the Commodity Futures Trading Commission (CFTC) as one example. It was scheduled to sign off on rules that would enable Intercontinental Exchange to start trading digital currency futures shortly, but with the government shutdown, that timeline is now unrealistic, a person familiar with the CFTC’s plan told Reuters. And the Securities and Exchange Commission has no staff to approve paperwork, which means initial public offerings (IPOs) are getting delayed, and brokers can’t get guidance on whether some trades are compliant with SEC rules, Marlon Paz, a lawyer and advisor to financial firms, told Reuters. “I fear there is little oversight in tumultuous times,” he said.
Reuters reported that a CFTC spokeswoman confirmed the agency has stopped rule-writing, while an SEC spokesman said the Commission was staffing emergency functions.