On a day when President Trump was handed some good news about jobs and had top business executives gathered around him, what did he do? He made it clear that he plans to smash a pillar of the economic recovery.
Mr. Trump met the news on Friday that 227,000 new jobs were added last month, the biggest gain since September, by signing a directive that calls for rolling back the Dodd-Frank Act. That’s the 2010 law to rein in the reckless, deceptive and predatory financial practices that both caused and amplified the devastation of the Great Recession.
At the meeting with business leaders, he boasted about his Dodd-Frank destruction plan to chief executives like Jamie Dimon of JPMorgan Chase, Indra Nooyi of PepsiCo and Stephen Schwarzman of Blackstone Group, the private equity firm. He complained that his friends in the business world “can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.” That’s ridiculous. Corporate America has been enjoying robust profits, and the stock market is near its all-time high. Certainly, none of the companies represented in that meeting are having a hard time getting credit.
If he would instead listen to the business community, he’d learn that many companies and their executives are deeply concerned about the effect of Mr. Trump’s other policies, like his executive order banning visitors and immigrants from seven predominantly Muslim countries. Travis Kalanick, the chief executive of Uber, the taxi-alternative service, on Thursday announced that he would not attend the White House meeting and would leave the president’s business advisory council because of his dismay with that order. “Immigration and openness to refugees is an important part of our country’s success and quite honestly to Uber’s,” he wrote in an email to employees, many of whom had called on him to distance himself from the president.
Mr. Trump, though, focused on Dodd-Frank, seemingly determined to sabotage the financial stability that has helped the job market recover in recent years and set the stage for continued growth. He has been lucky enough to inherit an economy that added 11.5 million jobs during President Obama’s tenure, the fourth-highest tally of the 12 administrations in the post-World War II era. There is, of course, much work still to be done: Growth in wages is not yet strong, and too many people are able to find only part-time work. But the foundation on which to build — economic growth, financial stability, monthly job tallies and low unemployment — is firm.
Diluting or repealing Dodd-Frank would be a grave setback. It would reassert the deregulatory sentiment that preceded and precipitated the financial booms and busts of recent decades, including the dot.com bust of the early 2000s and the mortgage bust that preceded the bank bailouts of 2008. Recession was a feature of both calamities. In each case, jobs, wages and wealth took hits from which many American workers have been unable to fully recover while those at the apex of income and wealth emerged even richer.
Until Mr. Trump, however, their rollback efforts were of limited success. Under Dodd-Frank, the financial system has become more stable and more responsive to human and economic needs.
Mr. Trump either does not understand or does not care that rolling back Dodd-Frank will undercut his pledge — and his opportunity — to fully revive the job market. History has affirmed that bolstered economic activity in the wake of major financial deregulation is a prelude to disaster for anyone whose economic well-being depends on jobs, wages and salary. Which means most Americans.
Mr. Trump may believe that ending Dodd-Frank will lead to more jobs by making it easier for businesses to get loans. But even if looser credit would help hiring — a very big if — the main problem in the job market today is not too few jobs, but wages that have been too low for too long. A rollback of Dodd Frank will not help that, and will hurt by forfeiting the stability that has helped the economy come this far.
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