What a second Trump term would mean for US financial policy

A victory by U.S. President Donald Trump in the Nov. 3 election would continue his administration's four-year deregulatory streak, which has delivered at least $40 billion in gains to banks and other financial firms, according to industry estimates.

Here are some more key financial rule changes that policy experts said they would expect if the Republican incumbent wins a second term in the White House.

Housing Finance Overhaul

Trump's administration could push ahead with its ambitious overhaul of the housing finance market.

The Federal Housing Finance Agency (FHFA) has begun the fraught process of returning Fannie Mae and Freddie Mac, the government-sponsored enterprises that guarantee over half the country's mortgages, to the private markets. It has allowed the pair to bolster their capital bases by retaining more of their profits and is drawing up new capital requirements that should be finished by the end of this year.

In a second term, FHFA Director Mark Calabria would be able to proceed with plans to potentially raise billions of dollars of extra capital from private sources, slimming down the pair's activities, bolstering their internal controls and reducing their risk exposure.

Fintech push

The Trump administration has been a major proponent of innovation in financial services and has already taken steps to make it easier for technology firms to get into banking. A second term would give Trump officials more leeway to push further into this often controversial territory.

Brian Brooks, acting head of the Office of the Comptroller of the Currency (OCC), has strongly advocated that fintech firms should be allowed to apply for federal banking charters that would give them more freedom to expand across the country. While that idea has been legally challenged by state regulators, a second Trump term would give the OCC more runway to get its idea off the ground.

Under Trump, the Federal Deposit Insurance Corporation also began issuing special depository licenses to non-bank companies for the first time in over a decade, paving the way for more non-bank companies to enter the sector if Trump wins the election next month.

Bank capital

Thanks to bank deregulation legislation here passed in 2018, Trump's regulators have lightened capital and liquidity rules here for many lenders, but global U.S. banks were largely left out of that package. Lobbyists expect Wall Street banks to win more capital relief if Trump is reelected, particularly with respect to the "G-SIB surcharge," an extra capital buffer required of big globally systemically important banks which have been fighting the measure.

Another area of industry focus will likely be the "Collins Amendment," a rule that was introduced after the financial crisis more than a decade ago and which sets a minimum leverage and capital requirement for banks. Federal Reserve officials, including Chair Jerome Powell, had expressed a willingness to temporarily ease that requirement with Congress's permission. Four more years under Trump would give the banking industry time to press for permanent relief.

Capital markets reform

Since a bill here overhauling U.S. capital markets rules stalled in 2018, Republican lawmakers and lobbyists have pushed the Securities and Exchange Commission (SEC) to use its powers to cut red tape for listed companies and make it easier for private companies to go public. Policy experts expect the SEC would continue during a second Trump term to overhaul corporate disclosure and reporting rules, and loosen restrictions on raising private capital.

After making it tougher for shareholders to push corporations to address environmental and social issues, the SEC is also expected to consider additional ways to rein-in activist investors if Trump remains in office. That could include potentially tightening short-selling restrictions and disclosure rules around when activist investors buy up company stakes, policy experts said.

The article originally appeared on Reuters