Banking Regulation in Trump’s Second Term: Weeks That Feel Like Decades
Vladimir Lenin’s famous quip, “There are decades where nothing happens; and there are weeks where decades happen,” aptly describes the seismic shifts in bank regulation unfolding just weeks into President Trump’s second term. Though it’s early days, three dynamics are likely to shape this new era:
Key Regulatory Dynamics
- Open for Business: There’s nothing this president loves more than deals–and deals require financing. He’s signaled that he wishes banks would lend more. His nominees have hinted at easier capital rules and streamlined merger approvals—indicating a push for more lending and M&A. Expect a friendlier stance on fintech charters, a rise in de novo banks, and an open door for innovators looking to disrupt traditional banking models.
- Innovation Yes, Chaos No: A tech-friendly posture won’t be a deregulatory free-for-all. No administration wants the financial system to blow up on its watch. Even as regulators roll out the welcome mat for new technology and alternative lenders, they’re likely to keep a close eye on risks that could trigger crises and headline-grabbing failures.
- DOGE’s Bite vs. Regulatory Reality: The White House and DOGE want smaller, weaker agencies, but starved oversight bodies could easily backfire: fewer staffers mean less bandwidth to review new ideas. Under-resourced agencies could slow approvals for fintech and crypto firms—ironic, given the administration’s growth and innovation goals. And if you’re the newly installed leader of a financial regulatory agency, you may resist drastic cuts, knowing you’ll be on cleanup duty if slash-and-burn tactics result in bank failures or scandals that cause seniors to lose their life savings.
Where This Leaves Us
The tension between pro-growth zeal and reduced regulatory capacity is the biggest wild card of President Trump’s second term. Whether we see an era of bold innovation or a return to heedless risk taking will hinge on how these conflicting priorities play out in the months ahead. Buckle up—these next few weeks might feel like decades.
