Let's roll (back): Piggybacking on last Friday's executive orders by President Trump to begin the process of rolling back the Dodd-Frank Act, Congressional Republicans expect to propose legislation as early as this week to replace that law with their own financial reform plan. Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, is close to unveiling his plan, called the Financial Choice Act 2.0. Wall Street Journal, New York Times, Washington Post
While Trump's executive orders are indeed "audacious," it's "unclear how well the administration can achieve its stated goals of spurring lending and job creation … without accompanying legislation," the Wall Street Journal's Heard on the Street column says. Many of Trump's objectives "would require legislation, and it remains to be seen how Congress will react to Mr. Trump's unilateral actions. Republican lawmakers with their own overhaul plans may not take kindly to being sidelined, and Democrats with filibuster power in the Senate could be pushed further into a combative stance."
Gary Cohn, U.S. President-elect Donald Trump's choice for director of the National Economic Council, arrives in the lobby of Trump Tower in New York, U.S., on Monday, Jan. 8, 2017. A marathon of Senate confirmation hearings starting this week will give Democrats the chance to put Trump's Cabinet nominees on trial even though they have little chance of actually blocking any of them. Photographer: Albin Lohr-Jones/Pool via Bloomberg
Albin Lohr-Jones/Bloomberg
Gary Cohn, the director of the president' National Economic Council and former president and chief operating officer of Goldman Sachs, will likely be "the president's point man for financial regulatory reform," the Financial Times reports. While Treasury Secretary designate Steven Mnuchin will have the "more glamorous title," it is Cohn, "the dyslexic son of an electrician from Ohio, who is likely to have a stronger influence on policy."
Among the biggest winners if Trump is successful in reforming banking law are investors in bank stocks. According to the Journal, "the six biggest U.S. banks could potentially return more than $100 billion in capital to investors over time through dividends and share buybacks if the Trump administration succeeds in a push to loosen bank regulation. While there is no guarantee the banks will do so when they are able, they have been eager in recent years to return capital as their profits have grown and their balance sheets have become less risky."
Indeed, financial stocks in the S&P 500 last Friday posted their biggest one-day gain since Trump's election, increasing about 2%. "Friday's policy actions appeared to validate investors who took a flyer on bank stocks after Election Day on hopes in large part that the Trump administration would deliver on promises to relax rules that govern lenders," the Journal said. Financial stocks "have surged 16% since November 8, more than any other group."
Wall Street Journal
Start cramming: The 34 largest banks will need to show they can withstand "a peak of at least 10% in unemployment, a sharp decline in housing prices, and a severe recession in the euro area," under more severe hypothetical stress tests unveiled by the Federal Reserve on Friday. Banks have until April 5 to respond to the assumptions, while the Fed will make the results public by June 30.
Elsewhere ...
Harvard Business Review: Although they share the enthusiasm for blockchain's potential, the authors of this article worry about the hype. "Our experience studying technological innovation tells us that if there's to be a blockchain revolution, many barriers — technological, governance, organizational, and even societal — will have to fall. It would be a mistake to rush headlong into blockchain innovation without understanding how it is likely to take hold."
Quotable ...
"I was proud to stand next to President Trump in the Oval Office today as he signed two important executive actions that represent the beginning of the end of the Dodd-Frank mistake." — Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee
Capital One, PNC, Truist and, U.S. Bancorp are urging regulators to cut duplicative calculations and align U.S. rules with global standards, a longstanding preference for banks but one that will likely find a warm reception from a deregulation-focused Trump administration.
In an environment of persistent economic unease, banks have a unique opportunity to help small businesses, Sekou Kaalund, U.S. Bank's head of branch and small business banking, said at American Banker's 2025 Small Business Banking conference.
The New York-based bank, which works with many Democratic campaigns, faces investor concerns that it might be targeted by the Trump administration. CEO Priscilla Sims Brown says the bank's "strong profitability" is its best shield from political threats.
The Ohio bank is working with Alloy Partners to build startups in fintech, payments and wealth management even as it acquires multiple banks this year.
Huntington's $7.4 billion acquisition of Cadence would give the Ohio-based bank a top-five market share in both Dallas and Houston. It comes just a week after Huntington closed its last Texas acquisition.
In an expanded partnership announced Monday, the card network and payment fintech will enable hundreds of millions of consumers and tens of millions of merchants to use new forms of artificial intelligence for shopping and payments.
