What Trump’s Deregulation Push Means for Banks
1/30/2025
Within the flurry of activity in the early days of Donald Trump’s second term, the push for deregulation is front and center. While this was expected after his election win, the sheer volume of speculation and the early signals from the administration might feel a bit overwhelming. To help make sense of it all, the RMA Journal turned to Douglas Elliott, a partner at RMA corporate member Oliver Wyman and a seasoned expert in financial regulation, to share his insights on the type of regulatory environment banks should prepare for. According to Elliott, banks should expect “significantly more deregulation under Trump 2.0 than there was in his first term,” but much of the change will depend on the administration's ability to navigate legal and institutional constraints. Here are some takeaways:
Expect Deregulation, But Not a Free-for-All
“While many people are concerned there is going to be excessive deregulation, it’s going to occur within a range that still provides quite significant protections,” Elliott explains. Well-run banks are unlikely to want complete deregulation, as it protects them from less responsible competitors. “If we took away all the capital requirements and just let the market decide, you’d get cowboys out there. ... Lots of bad things happen if you have a system that is the Wild West.”
Watch for Limited Legislative Changes
Despite the administration’s emphasis on deregulation, major changes requiring legislation are unlikely. “Significant amounts of financial industry regulation are based in laws that would take new legislation to eliminate. I think you are going to see very little legislation on financial regulation these four years,” Elliott notes. One exception could be crypto, with bipartisan support for clearer regulation in areas like stablecoins and crypto asset classification.
Supervision Will Be Harder To Change
“It’s much harder to change supervisory cultures and behaviors at regulatory agencies than it is to change a regulation,” Elliott points out. While political appointees at the top will push for less aggressive supervision, longstanding practices within agencies may limit significant shifts.
Prepare for Continued AML and AI Focus
“I am confident that on anti-money laundering there is not going to be regulatory rollback,” Elliott says. Instead, regulators are likely to emphasize efficiency, potentially leveraging AI and enhanced data sharing. Similarly, banks should expect increased attention on AI, operational risk, and crypto as these areas become more integrated into finance.
Plan for What’s Next
While much remains uncertain, Elliott advises banks to prepare now: “Banks should be thinking about what changes they would like to see and how that would change their strategies, as well as what changes are likely to occur and how that would change their competitive position.” By planning for contingencies, banks can position themselves to adapt quickly when specifics emerge.
For more insights from Elliott, register for his RMA webcast on February 13.