Republican presidential nominee Donald J. Trump may have shocked the world after the American people elected him as the 45th U.S. President, but financial service companies now face an uncertain future, according to a report from the American Banker.
Just like the Brexit vote back in June, Trump’s surprise victory has left many financial observers unprepared for an outcome that many didn’t think would be possible.
However, in 100 days, president-elect Trump will become America’s next president, which means that financial service companies must embrace Trump’s deregulatory views.
Not only that, but for the first time in more than ten years Republicans have control of the House, Senate, and White House at the same time. This then provides an easier path for changes to be made.
According to the American Banker, one act that is likely to change is the Dodd-Frank Wall Street Reform and Consumer Protection Act, more commonly known as Dodd-Frank, by increasing the threshold for tougher bank regulation above the $50 billion asset level at present.
Isaac Boltansky, an analyst at Compass Point Research & Trading said in a note to clients:
The odds of the $50B threshold being altered are [more than seventy percent] if Trump takes the White House.
However, while Trump’s campaign may have focused on issues such as immigration, trade, healthcare, and tax to name a few, he has remained tight-lipped on any policy details surrounding financial services.
Even though Trump may have stated that he will repeal Dodd-Frank, it’s not determined how this will pan out. It is believed that Trump may seek the advice from the Republican-held Senate on financial policy.
According to Stephen Moore, an economic advisor for Trump, ‘Dodd-Frank hasn’t worked.’
One of the reasons we want to roll it back is because we think it has had a very negative impact on small community banks.
And yet, even though Trump is reported to have promised to repeal Dodd-Frank, it won’t be a simple process. A compromise will need to be reached between those within the Senate, House, and White House for legislations to be passed – something that Trump must remember if he wants to be a successful leader of the American people.
It remains to be seen who Trump chooses over the next few weeks. However, while he is reported to be in favor of appointing Steven Mnuchin, former Goldman Sachs banker, as the next Treasury Secretary, opposition to this has already been voiced.
A statement from the Progressive Change Campaign Committee said:
Steven Mnuchin is a second-generation Goldman Sachs banker who made a fortune by foreclosing on working families’ homes, says there is ‘way too much regulation,’ and is unsure on both Glass-Steagall and Dodd-Frank.
However, in a bid to boost the FinTech sector in the U.S., Chris Larsen, CEO of Ripple, was reported last month as suggesting that the next U.S. president should appoint a FinTech advisor.
It remains to be seen whether Trump will heed this advice or not.
Featured image from Shutterstock.
Last modified: May 21, 2020 10:13 AM UTC