As news that Donald Trump would become the country’s next president emerged Tuesday night, stocks plummeted and then recovered to end Wednesday with gains.
The mood of consumer advocates, however, drooped and looks likely to stay down for the foreseeable future.
In the markets, the Dow Jones Industrial Index gained 256.95 points to close Wednesday at 18,589.69, up 1.4 percent. The S&P 500 Index gained 23.70 points to close at 2,163.26, up 1.1 percent.
Part of those increases came as stocks of big banks showed impressive gains based on Trump’s campaign promises to roll back Dodd-Frank financial regulations passed to avoid a repeat of the Great Recession. Shares of JPMorgan Chase rose nearly 5 percent to hit a new lifetime high, according to CNN Money, while Morgan Stanley stock gained 7 percent.
The outlook for consumer advocates, however, slumped Wednesday at they contemplated the specter of an all-Republican administration that is sure to attack financial regulations. The best advocates said they could hope for is that the rhetoric of the campaign trail might be toned down once Trump is sworn in.
“We worried that the opponents of consumer protection in Congress may feel emboldened to push the agenda of the big banks and financial industry,” said Lauren Saunders, associate director of the National Consumer Law Center.
During the campaign, Trump vowed to repeal the Dodd-Frank financial overhaul rules passed by Congress, which also created the Consumer Finance Protection Bureau designed by Sen. Elizabeth Warren, D-Massachusetts. The Republican Party platform also calls for repealing Dodd-Frank and wiping out the CFPB.
“I’d say Trump is a mystery,” Saunders said Wednesday. “He has spoken in broad terms about repealing Dodd-Frank and cutting back regulations, but he hasn’t said anything specific about the CFPB or consumer protection issues. I think we have to hope that he realizes the families who are struggling and feel that the system is rigged are the very families that the CFPB exists to protect against predatory lending and overdraft fees and abusive debt collection practices.”
The CFPB has slapped financial services with orders to refund $11 billion to more than 25 million consumers, and has levied hefty fines for anti-consumer practices, such as a September fine of $100 million against Wells Fargo after the bank was found to have opened 2 million unauthorized accounts for its customers.
Trump’s reaction at the time was that, “The real J.P. Morgan is spinning in his grave at the ridiculous settlements the bank is making to settle disputes. A settler is a soft target,” according to his Twitter account.
“Obviously, we’re concerned,” said Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group, a pro-consumer lobbying organization.
Republicans in Congress have tried to attack the CFPB and Dodd-Frank through riders and budget bills, but President Barack Obama has refused to sign bills with those riders.
“They’re going to try and amend Dodd-Frank, but they’ve got to go through the Senate unless they can do it as policy riders,” Mierzwinski said. “If they can’t do it through riders they’ve got to do it with legislation, and we’ll still have the filibuster and we still have Sen. Warren.”
Beyond Congress, a President Trump could neuter the CFPB if lawsuits challenging the structure of the bureau are upheld. Originally, the director of the CFPB could be dismissed “for cause,” but a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit found that restriction to be unconstitutional and ruled the bureau director can be fired by the president for any reason. The decision is being appealed.
“If this lawsuit against the CFPB isn’t overturned, the new president could fire the director on Jan. 21 for any reason,” Mierzwinski said.
Even if the decision is overturned, the future of the bureau and many financial industry regulations designed to protect consumers and the economy from another financial meltdown are likely to be threatened.
“The CFPB has been going after unfair practices, and special interests have been revving up Congress to go after the CFPB,” Mierzwinski said. “The general public strongly supports the CFPB. But with complete control of the House and Senate and executive branch in Republican hands, we’re going to have our work cut out for us.”