Members of President-elect Donald Trump’s transition team reportedly are considering making changes to some bank regulatory agencies by shrinking, consolidating or eliminating them.
These proposals have come up during team members’ interviews with potential nominees to lead the agencies, The Wall Street Journal (WSJ) reported Thursday (Dec. 12), citing unnamed sources.
The ideas floated in these interviews have included abolishing the Federal Deposit Insurance Corporation (FDIC) and shifting deposit insurance into the Treasury Department; eliminating the Consumer Financial Protection Bureau (CFPB) or limiting its responsibilities to consumer education; and either combining the FDIC, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve or having only one of them continue to regulate banks, according to the report.
Historically, it’s uncommon to eliminate agencies or make major changes to banking regulations except during the aftermath of financial crises, the report said.
Eliminating agencies would require congressional approval, and while Republicans will have slender majorities in the House and Senate, Democrats are unlikely to support any major changes, the report said.
Democrats did eliminate a banking regulator after the 2008 financial crisis, per the report. The 2010 Dodd-Frank law eliminated the Office of Thrift Supervision by folding it into the OCC.
The banking industry is unlikely to support eliminating a banking regulator, according to the report. While banks often complain about the challenges of being overseen by multiple regulators, they also like to be able to shop between regulators and tend to prefer the status quo, the report said.
It was reported in November that banking regulators said a change in presidential administrations won’t change their approach to financial crime. While Trump may be focused on deregulation, banking industry experts said at the time at a conference that financial crime will remain a bipartisan focus.
On Nov. 24, it was reported that Trump and congressional Republicans are considering curtailing the powers and funding of the CFPB, as Republicans have opposed the efforts of the CFPB under Democratic control, accusing it of regulatory overreach.
The CFPB’s ambitious rulemaking agenda — which includes proposed rules covering everything from remittances to credit reporting to the use of financial data — faces new uncertainty after the election, PYMNTS reported Nov. 6.
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