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Donald Trump is already signaling his plans for Wall Street through his appointments to federal agencies like the Federal Trade Commission, which aims to promote commerce and protect consumers. He wants to replace Lina Khan, the agency's commissioner, with Andrew Ferguson, who is expected to be less aggressive in blocking large mergers.
According to data from the London Stock Exchange Group, 2024 saw more than $3 trillion in mergers and acquisitions volumes globally. While it was slightly up from the year prior, it was consistent with the malaise that has gripped Wall Street amid the high interest rates and dealmaking slowdown of the post-COVID years.
But, with the second Trump administration set to take effect come Inauguration Day on January 20, investment bankers and private-equity financiers are gearing up for what could be a friendlier dealmaking environment. In an interview following the election with CNBC in November, Jeffrey Solomon, the president of financial firm TD Cowen, said he predicted that the "regulatory environment will be much more conducive to economic growth."
"There will be lighter and targeted regulation," he told the business news outlet, expressing a view that many in the financial-services industry share, whether or not they express those views aloud.
With Trump's historically less hawkish approach to regulation and pronouncements to spur economic activity and tame inflation, here are five ways his policies could shape Wall Street in 2025 and in the years to come.
Trump is generally expected to reduce regulations for companies, including banks. One way he could do this is by rolling back the Biden administration's plans to enforce stricter capital requirements on banks, nicknamed "Basel III Endgame." Bank leaders, including JPMorgan Chase CEO Jamie Dimon, have vehemently opposed the latest proposed rules, saying they would require banks to hold on to far more capital than they needed to manage their risks. According to law firm Davis Polk, Trump could ease the capital restrictions, which could free up banks to put more of their capital to work via lending or other activities.
M&A is once again showing signs of life, thanks to the Fed's plans to lower the cost of borrowing.
A KPMG survey of 300 corporate and private-equity dealmakers released in December revealed a bullish outlook among those poised to engage in M&A transactions in the year ahead. In the online survey, 85% of respondents said they were eyeing more deals now than six months ago, and 79% said that the outcome of the presidential election would produce "an easier regulatory or anti-trust environment for M&A."
Trump is expected to turbocharge the dealmaking environment by replacing the current head of the Federal Trade Commission, Lina Khan, who has been aggressive in blocking big mergers, including a $24.6 billion tie-up of supermarket chains Kroger and Albertsons. Khan has also taken steps to break up tech giants Amazon and Meta.
Trump has selected Andrew Ferguson, one of the FTC's current commissioners, to replace Khan as the FTC's chair. Ferguson is expected to be more welcoming of large mergers, although he has vowed on Silicon Valley tech giants, especially those that stifle conservative voices. In a post on X, he said: "At the FTC, we will end Big Tech's vendetta against competition and free speech. We will make sure that America is the world's technological leader and the best place for innovators to bring new ideas to life."
Trump embraced crypto on the campaign trail, becoming the first presidential candidate to accept campaign donations in cryptocurrency. Since being elected for a second term in the White House, he named venture capitalist David Sacks as the "AI & Crypto Czar." Sacks' job, according to Trump, will be to find ways to help crypto thrive, including by advising the White House on "a legal framework so the crypto industry has the clarity it has been asking for," according to a post on social media site Truth Social.
Trump's focus on crypto and AI has financial industry watchers betting a second Trump administration will prove a boon to fintechs, which could prove a mixed bag for established banks who have adopted new banking technologies to compete with the rise of payments and banking apps.
Davis Polk lawyers explained it this way in a December 19 report: "The focus on growth and innovation is likely to be centered around facilitating safe and sound fintech activities, making the path to achieving a bank charter for innovative firms more readily achievable and drawing clearer rules of the road for banking organizations to participate in a variety of crypto-asset-related and tokenization activities."
Trump is expected to reduce regulations generally, including consumer protection efforts that have drawn opposition from Republican lawmakers. On December 12, the Biden administration finalized rules limiting what banks can charge consumers who spend more money than they have in their accounts, also known as overdraft fees. The rule drew a lawsuit from banking groups and the ire of Senator Tim Scott of South Carolina, the incoming chairman of the Senate Banking Committee.
"Despite voters' clear message on Election Day, Director Chopra has advanced his agenda at a break-neck speed," Scott reportedly said at a December Senate Banking Committee hearing in reference to Rohit Chopra, head of the Consumer Financial Protection Agency, or CFPB.
Some Trump supporters have called for sweeping changes to the CFPB, an Obama-era agency responsible for protecting consumers from unfair treatment by financial firms.
"Delete CFPB," Elon Musk wrote in November on X, his social media platform.
Stock investors reacted enthusiastically to Trump's election, sending stocks to record levels until December when investors started harvesting gains. Continued stock-market optimism stands to boost IPO activity, which thawed out slightly in 2024 following several years of stagnation.
There were 214 IPOs filed in 2024, up 19% from the previous year, according to IPO tracker Renaissance Capital.
Whether the stock-market cheer continues, however, will depend on Trump's policies once he takes office on January 20. The president-elect is largely expected to take a pro-business stance, but he has also proposed taxing foreign imports at levels that threaten to slow the economy by raising the prices of consumer goods.
While tariffs don't automatically lead to rising prices, "adding tariffs at the scale being discussed would have inflation implications," said Rob Haworth, senior investment strategy director with US Bank Asset Management in a recent research report. Trump has proposed levying taxes of 10% on goods imported from China, and 25% tariffs on goods from neighbors Mexico and Canada.
