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Despite Trump's claims, bank regulation hasn't slowed lending

President Donald Trump on Tuesday repeated his campaign pledge to undertake a major overhaul of bank regulations, arguing that lending restrictions are hampering job growth.

Tighter lending conditions often throw cold water on job growth. A closer look at the data, however, shows that neither of those things is happening in the U.S.

Trump made his remarks following a White House meeting with a group of business executives, noting that his administration is working on giving a "major haircut" to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

The sweeping measure was enacted following the financial collapse of 2008 that sparked the deepest global recession since the 1930s.

"The banks got so restricted," Trump told the executives Tuesday. "We want strong regulation, but not regulations that make it impossible for banks to lend money to people that are going to create jobs."

While there may be good reasons to overhaul parts of the sweeping law, concern about a slowdown in bank lending isn't one of them.

Since the law took effect in July 2010, bank lending to businesses and consumers has continued to hit new highs.

Continued strong lending comes as the economy continues to produce hundreds of thousands of new jobs every month, driving the jobless rate below 5 percent.

Former Massachusetts Congressman Barney Frank, the Democrat who co-sponsored the law, said that only one provision in the more than 850-page law directly restricted lending.

"It's one that says, 'Please don't lend money to poor people, you can't lend money to poor people who can't pay you back for their mortgages," he told CNBC earlier this year. "Literally, that restriction on irresponsible subprime mortgages is the only lending restriction."

Other parts of the law, he said, were intended to promote lending. Those include the so-called "Volcker rule," named for former Fed Chairman Paul Volcker, which encouraged banks to devote more capital to lending and less to trading investments.

"Goldman Sachs, which is helping to populate this administration … because they are making less money from trading than they had been before … has created a whole new entity to lending," Frank said.

Overall, bank profits have also continued to move higher, more than doubling since the Great Recession ended.

Efforts to roll back portions of the law began almost as soon as it was signed into law. From the beginning, the debate over how to create new regulations to prevent another financial meltdown was one of the most contentious of the past decade, pitting reform-minded Democrats against free-market Republicans and spurred on by an army of lobbyists on all sides.

The resulting Dodd-Frank Wall Street Reform and Consumer Protection Act — named for Frank and former Democratic Sen. Christopher Dodd — was a sprawling kitchen sink of proposed regulations, signed by President Barack Obama in July 2010. It contained 17 separate sections, governing everything from car loans to CEO pay to Congolese conflict minerals.

The creation of the legislation governing the well-funded financial services industry fueled a massive lobbying effort that continues as the rule-making process drags on.

Shortly after taking office, Trump ordered the Treasury Department and other financial regulators to review the banking and consumer finance rules created under Dodd-Frank, a law he has called "a disaster."

Trump's order did not specify which regulations he would like to see lifted, which would require congressional legislation. But defenders of the law have noted that the Trump administration could choose to relax enforcement of portions of the law it deems to be too restrictive.

While sweeping in scope, the law Congress enacted left the details of specific rule-making to a patchwork of regulatory agencies, including a newly created Financial Stability Oversight Council designed to coordinate the rule-making process. A new Consumer Financial Protection Bureau, an independent consumer lending watchdog, consolidated regulatory powers once housed in seven different federal agencies with a mandate to protect individuals from abusive lending practices by the financial services industry.

With nearly 400 separate sets of rules and regulations, rolling back Dodd-Frank now will likely involve multiple skirmishes on Capitol Hill between defenders and supporters of the law. With hundreds of new rules written by multiple agencies, the law became a ripe target for a group of well-paid lobbyists.

That's one reason that, despite specific deadlines attached to many of the new rules, Dodd-Frank remains a work in progress.

As of last July, six years after it was signed into law, nearly a third of the regulations had not been finalized.

Watch: Trump rolling back regulation at breakneck speed