Cutting red tape
As Wall Street expects less regulation under president-elect Donald Trump, his transition team is reportedly exploring ways to shrink, consolidate or even eliminate top banking regulators. Elimination of any agency would require congressional approval, and it may not be easy to find support for such a drastic step in slashing government oversight.
What’s on the table: In interviews with candidates to lead bank regulatory agencies, Trump advisers asked whether the Federal Deposit Insurance Corp. could be abolished, people familiar with the matter told the Wall Street Journal. The advisers, which include officials in the newly-formed Department of Government Efficiency (DOGE), also asked the candidates if the deposit insurance could be absorbed into the Treasury Department once the FDIC is dismantled.
The interviews with the candidates – who were under consideration for the FDIC and Office of the Comptroller of the Currency – also involved discussions about potentially consolidating or restructuring the FDIC, OCC and the Federal Reserve. Another plan that was floated involves only one agency – the FDIC, OCC or parts of the Fed – regulating banks. Elon Musk, who co-leads the DOGE, last month called for the elimination of the Consumer Financial Protection Bureau, which just hit banks with a cap on overdraft fees.
Deregulation hopes: At a recent event, JPMorgan (JPM) CEO Jamie Dimon said the banking industry is hopeful for less red tape under Trump “because they’ve had successive years of regulations, a lot of which stymied credit.” SA analyst MacroGirl sees these hopes further lifting bank stocks, echoing the post-2016 election rally that was “driven by expectations of higher earnings and deregulation rather than actual change.” Investing Group Leader Jonathan Weber in a recent analysis recalled deregulation during Trump’s first term, adding that he could move in a similar direction in his second term.
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