Former New York City Mayor Michael Bloomberg, a 2020 Democratic presidential candidate, proposed on Tuesday a vast expansion of financial regulations amid intense criticism over his past skepticism of Wall Street rules.
The plan would reverse the Trump administration’s loosening of post-financial crisis regulations created by the Dodd-Frank Wall Street reform law and drastically expand the power of federal financial watchdogs.
Bloomberg, who has amassed a $64 billion fortune through his eponymous financial analysis and media company, has taken heat for his past criticism of Dodd-Frank and for blaming the 2007 housing collapse on laws intended to stop racial discrimination in lending.
But his proposal includes several policies long supported by fierce Wall Street critics, including a financial transaction tax, the renewal of U.S. Post Office banking services and tougher restrictions on risky financial trades.
“Given how profoundly the 2008 crisis undermined faith in the establishment — and given how close it brought the world to economic collapse — authorities everywhere should be doing all in their power to fix the flaws it revealed,” the plan reads.
The centerpiece of Bloomberg’s proposal is unwinding the Trump administration’s efforts to roll back Dodd-Frank. The 2010 law signed by former President Obama cracked down on the financial sector through tougher oversight, stricter crisis prevention measures and harsher penalties for dangerous or abusive conduct.
Bloomberg, a former Republican who was a registered independent from 2007 through 2018, was once among the law’s toughest critics outside of the GOP, calling the plan “dysfunctional” in 2014.
“The trouble is if you reduce the risk at these institutions, they can’t make the money they did,” Bloomberg said in 2014. “If they can’t make the money they did, they can’t provide the financing that this country and this world needs to create jobs and build infrastructure.”
While the financial sector has enjoyed record profits under Dodd-Frank, its critics have long accused the law of restraining lending and economic growth. Trump and several of his regulatory appointees have since loosened stress testing and capital requirements, all of which Bloomberg said he would seek to reverse.
Bloomberg’s plan also calls for strengthening the Community Reinvestment Act, a 1977 law intended to fight racial discrimination in banking and mortgage lending. Bloomberg had previously blamed the elimination of “redlining,” the practice of denying mortgages to customers largely due to race, for laying the groundwork for the 2007 housing crisis.
“Once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like,” Bloomberg said in 2008.
Bloomberg appeared to adjust his position in Tuesday’s proposal, which recognizes that “more than 50 years after the adoption of fair lending laws, lenders still discriminate against people of color, who experience higher denial and interest rates (all else equal).”
Bloomberg promised to bolster the Consumer Financial Protection Bureau (CFPB), a regulatory agency created through Dodd-Frank and designed by Sen. Elizabeth Warren (D-Mass.), a fellow 2020 Democratic hopeful.
The CFPB, one of the most polarizing products of the law, had issued a slew of strict regulations on banks and lenders to curb short-term, high-interest “payday” loans, potentially discriminatory auto loan premiums and forced arbitration between consumers and financial institutions.
The Trump administration has repealed or seriously weakened each of those rules, and Bloomberg pledged Tuesday to restore them. Bloomberg also proposed eliminating restrictions in Dodd-Frank that prevent the CFPB from regulating auto lending and credit reporting.