By Pete Schroeder and Chris Prentice
WASHINGTON/NEW YORK (Reuters) – The banking and finance industries are swiftly outlining their desires for reduced regulation under the upcoming administration of President Donald Trump as Wall Street seizes an opportunity to shape policy.
Several financial trade groups are crafting detailed wish lists to present to Trump’s transition team, as per four industry sources who preferred to remain anonymous.
This comes after weeks of communication between Trump’s team and industry stakeholders, lawyers, and lobbyists in anticipation of a potential return to the White House in 2025, as per three sources familiar with the efforts. Two of the sources mentioned that some trade groups are eager to submit their wish lists promptly.
The swift pace at which the transition team and industry are collaborating to identify potential regulatory changes highlights the proactive approach the new administration may take.
Following Trump’s decisive victory on Tuesday, this initiative has gained momentum, with Trump supporters urging industry players to outline their concerns and suggest solutions for governmental issues.
The banking sector is particularly interested in seeing the next administration scale back on various contentious regulatory projects, such as the proposed Basel III Endgame rules that would significantly increase capital requirements for large banks to mitigate risks. Bank groups have been advocating for a significant overhaul of these plans for months and anticipate the new administration to either start afresh or modify the existing framework, as per three industry sources.
Banks are also likely to seek relief from fair-lending rules currently under dispute, streamlined annual stress tests for major banks, and a more lenient approach to evaluating bank mergers, as mentioned by three sources.
While major U.S. banks prefer to adhere to the Basel framework of international banking standards, they are pushing for less stringent capital requirements that still align with the regulations, according to two sources familiar with the lobbying efforts of banks.
The Consumer Financial Protection Bureau (CFPB), which has intensified enforcement actions against banks under director Rohit Chopra, is another area of focus.
Trump appointees are expected to halt CFPB rules regarding credit-card fees, open banking, and excessive fees, as per an industry representative with knowledge of the discussions.
The banking and financial industry will closely monitor efforts to craft tax legislation in Congress, with a primary focus on preserving lower corporate tax rates among the top industry priorities.
The private fund industry is concentrating on easing the aggressive agenda of the Securities and Exchange Commission (SEC) and safeguarding the tax treatment of carried interest to ensure it remains taxed as capital gains rather than ordinary income, according to a source familiar with the matter.
The four industry sources noted that outreach from Trump’s team this time around has been more thorough and detailed compared to 2016, indicating a more organized and efficient approach to shaping the new administration.
In addition to soliciting policy recommendations, industry representatives have also been asked for input on potential high-level appointees to lead bank and financial regulators.
However, it may still take several weeks or months after Trump’s inauguration on Jan. 20 to appoint new regulatory chiefs, as the Senate is likely to prioritize higher-level cabinet picks first, as mentioned by two individuals.
One of the priorities for the Alternative Investment Management Association, representing $3 trillion in hedge and private credit funds, is to foster more dialogue between industry participants and regulators.
Private funds have challenged the SEC on its rulemaking and achieved a significant victory this year when a U.S. appeals court overturned a major SEC rule imposing stricter oversight on them. Other cases are still pending court decisions.
“I anticipate a return to traditional rulemaking with proactive engagement, where there’s not this adversarial relationship with a majority of the market participant community,” said Daniel Austin, head of U.S. markets policy and regulation at AIMA.