Elections Outlook Report - Flipbook - Page 49
Trump Administration Financial Services Executive Outlook
Rollback of Dodd-Frank Act Provisions
Tax Reform
During President-Elect Trump’s previous administration, he signed the
Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018,
amending parts of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010. These key changes meant that many regional
and community banks faced fewer regulatory requirements, freeing up
resources for lending and investment. We expect further efforts to roll
back Dodd-Frank provisions during the next Trump Administration.
The Tax Cuts and Jobs Act of 2017 was a cornerstone of Trump’s
economic policy. By reducing the corporate tax rate from 35% to 21%,
the act significantly increased after-tax earnings for banks and financial
institutions. This boost in profitability provided these institutions with
additional capital for expansion, lending, and investment activities. The
expiration at the end of 2025 of many TCJA provisions will provide an
opportunity for additional business-friendly tax measures to be added to
an extender bill.
Regulatory Easing
In his first administration, Trump appointed regulators who favored a
less aggressive approach toward the financial industry. This shift led to
modifications of the Volcker Rule, allowing banks increased flexibility in
proprietary trading. Agencies like the Securities and Exchange Commission
(SEC) and the Commodity Futures Trading Commission (CFTC) adopted
policies that were considered more industry-friendly, focusing less on
stringent oversight and enforcement. We expect the incoming Trump
Administration to continue this trend, and a 53-seat Republican majority
in the Senate will facilitate the confirmation of business-friendly Trump
nominees.
SEC’s Climate Rule
Republicans are preparing to roll back corporate greenhouse gas
emissions reporting requirements and other regulatory initiatives set
by the Biden administration’s SEC. Trump has repeatedly opposed ESG
initiatives, and under his leadership, the SEC aims to begin dismantling
climate regulations that were introduced in March, though implementation
has already been paused due to legal challenges. He also plans to issue
an executive order to limit employer offerings of ESG funds in retirement
plans. A Republican-led SEC may also seek to rescind rules affecting hedge
fund registrations and short sales, facing ongoing lawsuits from industry
groups.
