President Trump on Friday is slated to sign three executive actions meant to spark reviews of tax and financial regulations, the latest in the White House’s effort to rethink and potentially roll back federal oversight.
The precise impact of the new actions is unclear, but they could lead to a loosening of restrictions on the way companies are structured and scale back regulations on large financial companies.
Trump will sign all three documents at the Treasury Department, the agency said.
The documents will include an executive order that directs Treasury Secretary Steven Mnuchin to “review significant tax regulations issued in 2016” to see if they “impose an undue financial burden on American taxpayers, add undue complexity, or exceed statutory authority.”
One of the most sweeping tax regulations imposed in 2016 was written by the Obama administration’s Treasury Department and it made it much harder for companies to use a process known as “inversion” to incorporate overseas in places like Ireland so that they could avoid paying U.S. taxes.
A spike in the number of companies using this tax loophole — particularly pharmaceutical firms — outraged U.S. lawmakers from both parties and prompted the Treasury Department to act. But many firms complained that the Obama administration was overstepping its authority. It's unclear if the inversion rule will be part of the new Treasury review.
Trump will also sign two new memorandums on Friday at Treasury, though they both seem to overlap with reviews that are already underway.
One will direct Mnuchin to review something called “orderly liquidation authority,” Treasury said, which is a regulatory process that requires a process for winding down large, failing financial companies. This review would look at whether an “enhanced bankruptcy authority” would be better than the process established by the Dodd-Frank financial overhaul law. The review also asks Treasury to consider whether the liquidation rules “could lead to excessive risk-taking” by financial companies.
The Treasury Department is already conducting a review of existing financial regulations, however, and it's unclear how this new memorandum would direct the agency to do anything differently from what it is already considering.
The other presidential memorandum would call for a review of the way the Financial Stability Oversight Council designates certain companies for enhanced financial regulation, a threshold set up by the Dodd-Frank law. Many financial companies and Wall Street executives have complained about this process, but it is another part of the financial regulatory system that was supposed to already be under review.