Advisers to President-elect Donald Trump are reportedly considering a significant restructuring of bank regulatory agencies. This potential overhaul could involve shrinking, consolidating, or even eliminating key financial watchdogs in Washington.
What Happened: Discussions among Trump’s team have included the possibility of abolishing the Federal Deposit Insurance Corp. (FDIC) and transferring its deposit insurance responsibilities to the Treasury Department, as per sources familiar with the matter. These discussions have taken place during interviews with potential nominees for leading bank regulatory roles, The Wall Street Journal reported on Friday.
Any such move would require legislative approval, and while departments have been reorganized historically, the complete closure of major cabinet-level agencies like the FDIC is unprecedented. Bank executives are hopeful that Trump will ease regulations on capital requirements and consumer protections.
Potential nominees have met with Scott Bessent, the Treasury Secretary pick, and the Department of Government Efficiency, co-chaired by Elon Musk and Vivek Ramaswamy. Discussions have also touched on merging the FDIC, the Office of the Comptroller of the Currency, and parts of the Federal Reserve, as outlined in the “Project 2025” policy document.
Team Trump has yet to respond to Benzinga’s queries.
Why It Matters: The potential overhaul of bank regulations aligns with President-elect Trump’s plans to reduce regulatory burdens, a move that has been met with enthusiasm by Wall Street bankers. Jamie Dimon, CEO of JPMorgan Chase, expressed optimism about the prospect of less red tape, which he believes would allow banks to lend more freely and stimulate economic growth.
Furthermore, Morgan Stanley analyst Betsey Graseck has a positive outlook on large-cap banks heading into 2025, citing a stabilizing regulatory environment as beneficial to the industry. Trump’s proposed changes could potentially lead to a more favorable climate for big banks, contributing to their growth and influence.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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