Bank leaders have been asking this question since Donald Trump surprised the nation by winning the election on November 8.
For years, increasing regulations has been the predominant theme for banks. With this unforeseen national shift, we find ourselves looking at the very real possibility of deregulation—and soon. Case in point, on December 1, the House passed a bill that would eliminate the $50B SIFI threshold, replacing it with more qualitative measures. Although this only impacts a few of the country’s largest banks, it is an encouraging sign of things to come.
Even more encouraging for most small- and medium-sized banks is Trump’s connection with Jeb Hensarling, Chairman of the House Financial Services Committee. Hensarling adamantly opposes financial regulation and introduced the Financial CHOICE Act to counter Dodd-Frank. Hensarling is a longtime friend of Vice President-elect Mike Pence and has a member of his staff on Trump’s transition team. He was initially expected to be Trump’s pick for Treasury Secretary, though Steven Mnuchin has been nominated as the apparent incoming Treasury Secretary.
Mnuchin is no friend to financial regulation, either. He has stated on more than one occasion that scaling back regulations will be a top priority for Trump’s administration, along with tax reform.
In addition, Mike Crapo is expected to become the new chairman of the Senate Banking Committee as Richard Shelby’s tenure ends. His native state of Idaho has lost “a pretty significant percentage of its community banks” as a result of regulations. He has posited that changes to Dodd-Frank and regulatory relief for community banks will be among the primary issues facing the committee in 2017. Although Shelby has also been a supporter of regulatory relief, we believe Crapo will bring a fresh perspective and different political alliances to the table.
Swift Change is on the Horizon
It’s expected that Trump and his administration will push major reform within the first three months in office. This is unique among most incoming presidential administrations. And with Republican support in the House and the Senate, we’re optimistic they will be successful—at least relatively so, considering the tough political process.
We’re eager to see what the future holds for our community and regional banks, and we know you are, as well. The HORNE team will continue to monitor how every development in the transition process impacts the regulatory environment. It’s our priority to make sure you have the most relevant information and the help you need to understand what it means to your bank.
Stay tuned to the blog and don’t hesitate to get in touch with one of our Banking regulatory specialists if you have any questions.
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