A potential second term for Donald Trump could see a significant weakening of U.S. financial regulatory authorities, based on a comprehensive analysis of public records and dialogues with individuals close to the ex-president. Following the severe financial downturn akin to the Great Depression, legislative measures significantly bolstered the federal oversight of the finance industry to avert a recurrence of the 2008 global financial debacle.
Should Trump return to office, there is an anticipated push to dial back these enhancements, reduce safeguards for consumers and small investors, and ease the fundraising process for businesses, as per discussions and proposals from entities likely to sway a conservative leadership. Conversations with approximately a dozen advisers and consultants to Trump and his circle shed light on these intentions.
Although Trump has yet to formalize a policy team or unveil comprehensive regulatory strategies, a network of experts and confidants are actively proposing regulatory modifications, suggesting potential appointees, and sharing their visions through various media to influence Trump's policy direction.
Among the proposed changes are limitations to the Dodd-Frank Act, which was enacted post-2008 crisis to mitigate systemic risks, and facilitating capital raising for private firms, thereby increasing exposure to less regulated and more opaque private markets and securities. More recent propositions target the rollback of environmental, social, and governance (ESG) investment criteria and significant reductions in regulatory body staffing via Schedule F, potentially reclassifying thousands of civil servants as easily replaceable political appointees.
Trump's campaign has highlighted his previous tenure's deregulation efforts as economically beneficial. Despite attempts to undo Obama-era financial regulations and varying economic growth rates between Trump's and Biden's administrations, the focus remains on regulatory rollback.
Michael Faulkender, formerly with Trump's Treasury and now at the America First Policy Institute, advocates for replacing bank stress tests with stricter capital requirements to avoid systemic failures. He criticizes ESG investments for deviating from fiduciary responsibilities and diluting financial system integrity.
Other conservative voices call for dismantling the Consumer Financial Protection Bureau and criticize the SEC's regulatory approach as overly politicized. The Biden administration, however, defends its regulatory stance as necessary for preventing financial abuses and promoting economic stability.
The feasibility of these deregulatory ambitions hinges on the upcoming elections, with significant changes likely requiring congressional approval. Nonetheless, executive agencies could advance other aspects of the agenda, particularly concerning environmental reporting and the expansion of political appointee classifications, which could reshape the regulatory landscape.
Even in the event of an electoral defeat, Trump's judicial appointees may influence future regulatory authority challenges. The Heritage Foundation and the America First Policy Institute are pivotal in formulating and promoting these policy shifts, aiming to embed conservative economic principles deeply within federal governance.
As the 2024 election approaches, speculation about Trump's potential cabinet picks, including financial sector influencers and former administration officials, underscores the ongoing discussions about the direction of U.S. financial regulation under possible renewed Trump leadership.
