It would seem that reelected President Donald Trump had barely wrapped up his inaugural address before the banking leaders started parsing what it all means for them.
Amid all the conjecture, a few common themes emerged.
Trump 2.0 Leadership Changes and Impact on Financial Services
Legal experts at Snell & Wilmer—a Phoenix, Ariz. law firm—identified industry shifts that they believe are most likely under Trump 2.0:
- Significant regulatory changes, stemming from leadership reassignments in key agencies. A new director for the Consumer Financial Protection Bureau (CFPB), for instance, could relax regulations from the Biden administration, resulting in fewer enforcement actions against financial entities
- The legal ramifications of a refocused view of litigation in the financial services industry. For example, a lawsuit challenging the CFPB’s Open Banking Rule under the Dodd-Frank Act could reshape the regulatory landscape by questioning the agency’s authority and prompting potential revisions to address industry concerns
- State-level enforcement resulting from federal deregulation. As the latter accelerates, state attorneys general are expected to intensify their efforts, potentially posing new compliance challenges for financial institutions.
The ongoing coverage from Banking+ of the financial services ramifications of President Trump’s return to Washington has recently included the following:
- Financial Markets Preparing for Trump’s Regulatory Changes and Investor Demands
- How Trump’s SEC Could Reshape U.S. Financial Regulations
- How Trump’s Crypto Policies Could Reshape Bitcoin’s Future
- How the Red Wave is Transforming the Banking Industry
Potential Benefits for Financial Services Under Trump 2.0
When industry forces shift, results can be uncertain, but in times of apparent ambiguity, benefits often emerge. Reporter Adrea Deckert, of BridgeTower Media Newswire, notes several potential financial services upsides from the new administration. She cited these insights from the observations of Mary Ann Scully, dean of Loyola University Maryland’s Sellinger School of Business:
- A lower interest rate environment and lighter regulatory oversight
- Bolstered stability from the extension of 2017 Tax Cuts and Jobs Act provisions
- Possible corporate tax reductions
These, too, may turn out to be double-edged swords. Scully cautions that each apparent advantage carries a series of possible drawbacks, including budget deficits, a weaker dollar, and inflation.
She also sees risk in the new administration’s stance on deportations, which could deprive the agriculture and construction industries of their labor force.
Financial Institutions React Swiftly to Trump’s Policies
Despite the upsides and downsides (real or conjectured), the industry reacted swiftly.
The leaders at JPMorgan Chase (JPM), for example, wasted no time in huddling to plan the next steps, according to AOL reporter Jennifer Schonberger.
She noted that in the aftermath of Trump’s address, JPM created a “war room” to assess the flurry of executive orders issued from his first day in the Oval Office. Responding to the rapid pace of change, bank leaders were “…up all night working on it,” says Mary Callahan Erdoes, JPMorgan’s Head of Asset and Wealth Management.
Similarly, Bank of America focused on the new administration’s potential economic impact, especially from Trump’s proposed tariffs, which could reach 25 percent on Mexico and Canada. CEO Brian Moynihan suggested that tariffs of 10–15 percent might have minimal effects, but higher rates could be inflationary. “Most of [the tariff impact] will pass through,” Moynihan said, adding that the Federal Reserve will need to adapt its policies to the administration’s fiscal strategies.
How Financial Institutions Can Stay Ahead
As the U.S. financial services industry embarks on a reinvented regulatory landscape, this much is certain: Financial institutions must now, as always, remain proactive, monitoring policy shifts, legal developments, and enforcement trends even as they morph quickly.
By adapting their compliance and litigation strategies, it is hoped that institutions continue to effectively manage risk, capitalize on new opportunities, and maintain consumer trust amidst a dynamic environment.
