Janet Yellen and Mario Draghi Oppose Donald Trump’s Financial Deregulation Push

Jacquelyn MartinAP Images

Janet Yellen and Mario Draghi staunchly oppose U.S. President Donald Trump’s push to deregulate financial regulations put in place after the 2008-2009 financial crisis. Janet Yellen, the Federal Reserve chairman, and Mario Draghi, the European Central Bank (ECB) president, both stated their opposition to financial regulation overhaul.

During a speech at the Federal Reserve’s yearly retreat in Jackson Hole, Wyoming, Draghi told the listening audience, “we have only recently witnessed the dangers of financial openness combined with insufficient regulation.” Draghi’s statement referenced the situation prior to the 2008-2009 financial crisis.

Yellen used her speech as an occasion to issue a subtle warning to the Trump administration about their deregulation aspirations. Yellen stated, “already, for some, memories of this experience may be fading — memories of just how costly the financial crisis was and why certain steps were taken in response.”

Trump and his administration have a preference to lessen the regulations in the financial sector. Trump lists reasons for deregulation being stringent regulations inhibiting the ability of businesses and individuals to obtain loans from financial institutions. Trump was quoted in the New York Times as saying, “they just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”

Trump has publicly hinted that there is a distinct possibility that when Yellen’s tenure as Federal Reserve Chair ends in February 2018, he will not be reappointing Yellen to the position.

Stanley Fischer, the Federal Reserve’s vice chairman, offered his opposition to the Trump administrations deregulation push in the Financial Times. Fischer stated, “After 10 years, everybody wants to go back to a status quo before the great financial crisis. And I find that really, extremely dangerous and extremely shortsighted.”

Haruhiko Kuroda, Janet Yellen, and Mario Draghi Have A Discussion
Haruhiko Kuroda (Head of Bank Of Japan) Janet Yellen (Federal Reserve Chair), and Mario Draghi (European Central Bank President), and Haruhiko Kuroda talk in Jackson Hole [Image by Martin Crutsinger/AP Images]Featured image credit: Martin CrutsingerAP Images

Yellen was not totally opposed to the introduction of some deregulation. Yellen prefers that any deregulation introduced to be “modest” in nature. In her Jackson Hole speech, Yellen stated, “any adjustments to the regulatory framework should be modest and preserve the increase in resilience at large dealers and banks associated with the reforms put in place in recent years.”

President Donald Trump Listens To Questions From News Reporters
President Donald Trump listens to a question from a news reporter [Image by Pablo Martinez Monsivais/AP Images]Featured image credit: Pablo Martinez MonsivaisAP Images

Draghi was much less compromising in his position. Draghi viewed the connectivity of the contemporary global economy as a glaring reason to oppose protectionist deregulation championed by the Trump administration. Draghi stated, “to foster a dynamic global economy, we need to resist protectionist urges.”

[Featured Image by Jacquelyn Martin/AP Images]