Michael Kemmers statement on the review of Dodd-Frank Act
The US government announced on Friday that it would review under an executive order the Dodd-Frank Act passed in 2010 by the Obama administration. Michael Kemmer, General Manager of the Association of German Banks, comments as follows:
“The executive order signed by US President Trump to review the Dodd-Frank Act doesn’t come as a surprise. Republicans in the House of Representative and in the Senate have always said the act regulates the financial sector too strictly.
And it may certainly make good sense to take a critical look at these requirements, which were introduced in the wake of the financial crisis and not always coordinated with each another. But valuable achievements, especially on a basis harmonised worldwide, should not be simply discarded out of hand. A ‘competition of laxity’ in regulation isn’t going to help anyone.
From both a German and European perspective, the important point will be to ensure that a change of course with the Dodd-Frank Act doesn’t undermine the basic lesson learned from the financial crisis: the stability of the global financial system can only be guaranteed by internationally agreed regulation. Depending on how significant the changes are, we cannot rule out the possibility of competitive distortion, primarily to the detriment of Europe, as a result of differences in regulation on the two sides of the Atlantic. We will look at each proposed measure from this angle, too, and evaluate it accordingly.
But one thing is clear: these measures will do nothing to facilitate the ongoing negotiations on Basel IV.”