Era of Deregulation Begins
President-elect Donald Trump has tapped Paul Atkins, a longtime critic of financial regulation, to retool the existing framework that banks, insurance companies, and other financial institutions operate within.
The appointment is a nod to opponents of financial regulation, many of whom stonewalled President Obama’s attempts to rein in the excesses of Wall Street. Trump has already said much of the Dodd-Frank law will be “dismantled,” but there were few details beyond that.
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As a result, markets are looking at his staffing decisions for hints on how the regulatory environment could be affected. Atkins is the clearest sign yet that financial companies are going to be given free rein under a Trump administration. (Source: “Donald Trump’s Point Man on Financial Regulation: A Former Regulator Who Favors a Light Touch,” The Wall Street Journal, November 11, 2016.)
Not only does Trump’s hiring of Paul Atkins signal that his administration will look after their interests, but it explains this week’s rise in bank stocks. The S&P 500 Bank Stocks Index rose 11.2% in the past five days, showing that markets favor his deregulatory stance.
Atkins was the Chairman of the Securities & Exchange Commission (SEC) between 2002 and 2008. He was outspoken in criticizing the fines levied against big banks, saying they do nothing more than punish shareholders.
“Are we just sort of headline-grabbing?” he asked in a 2005 interview with Business Week. “Is that really the best way to deter bad conduct, by hurting the people that we’re supposedly helping? No. The best solution is to hold individuals accountable because someone in the company cooked the books.” (Source: “Online Extra: What Gets the SEC’s Atkins Riled Up” Bloomberg, February 14, 2005.)
These opinions are part and parcel of Atkins’ worldview. He is a staunch Libertarian and defender of laissez-faire economics. According to past colleagues, his natural inclination is to believe in the best of markets and the worst of government.
Many on Wall Street would welcome this paradigm shift. Bank profits have fallen steadily through recent years as layers of regulation have been matched only by an onslaught of litigation. There have been dozens of fines settled with the Justice Department and SEC.
Since leaving public office, Atkins has advised corporations on how best to navigate the current regulatory environment through his firm, Patomak Global Partners LLC. The firm has deep roots in Washington DC’s financial regulations community, making it a source of great expertise.
