President Donald Trump has been making a splash since his inauguration, not unlike his time as a presidential candidate and during the transition as President-elect. Now that he’s in office, it is time to see what will indeed be followed through on and what that will mean for financial institutions.
Anyone working in the financial services industry since 2008 has experienced the tightening of regulatory restraints on their business. It appears we are finally in a position to see these restraints loosened, or perhaps some other relief to alleviate the pressure in the meantime.
With last week’s announcement that President Trump signed a memorandum ordering review of the major banking rules established since the financial crisis, many in the financial services industry are still trying to determine the short- and long-term takeaways. The president’s memorandum triggers more of a review of the Dodd-Frank Act than any actual changes at this point. I believe this is a first step by the administration in searching for opportunity to lessen the regulatory impact of Dodd-Frank without Congressional involvement in the short-term, and where to focus efforts involving Congress in the long-term.
At this point, the most likely short-term results will be through the regulatory bodies in applications of the laws. We are unlikely to see a repeal or major overhaul of Dodd-Frank anytime soon. However, we can be certain the current administration will look to the path of least resistance to roll back its impact in the near-term, especially the implications on community and regional banks. A more substantial change would have to involve Congress and likely significantly greater opposition.
There is little doubt changes are coming. While it is still too early to come to any final conclusions, I am confident there will be changes and resistance to those changes. It will be exciting to watch in the coming months and to see some welcome regulatory relief to many financial service providers.