As President Elect Donald Trump prepares to return to the White House following his re-election, the trust and wealth management industry is poised for significant changes. With the GOP now controlling both the Senate and the House, and a Supreme Court reshaped by Trump’s three appointments, his administration is likely to wield considerable influence across multiple sectors, including financial services. Recent cabinet appointments and developments within the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), among others, underscore the potential for regulatory transformation.
Office of the Comptroller of the Currency
Michael J. Hsu, Acting Comptroller of the Currency since May 2021, oversees the regulations governing trust departments for all national charter banks. His tenure has focused on stringent regulatory oversight and consumer protection, as evidenced by his advocacy for reforming overdraft practices. Hsu’s tenure will likely conclude with the new administration. Trump would have immediate authority to replace Acting Comptroller Michael Hsu with another acting comptroller, who could potentially lead the agency for several years until Senate confirmation of a permanent replacement. This transition is particularly significant for trust departments and wealth management firms, as the OCC traditionally sets the standard for fiduciary regulation and oversight. Such a change could significantly alter the regulatory landscape for national banks and their trust departments.
The FDIC
Simultaneously, Martin Gruenberg, Chairman of the FDIC, has announced his retirement effective January 19, 2025. Gruenberg has served nearly two decades at the FDIC, including two terms as chairman. His departure creates an opportunity for the Trump administration to appoint new leadership, potentially aligning the FDIC’s direction with a deregulatory agenda.
The US Treasury
Under Treasury Secretary Scott Bessent’s leadership, the Department of the Treasury is set to play a pivotal role in advancing the Trump administration’s pro-business and tax-focused agenda. Bessent, a veteran of Wall Street, has committed to making first-term tax cuts permanent while introducing new measures aimed at eliminating taxes on tips, Social Security benefits, and overtime pay. His priorities align with the administration’s goals of fostering economic growth and reducing financial burdens on businesses and individuals. Supporting this vision is Michael Faulkender, nominated as Deputy Treasury Secretary, whose background in economic policy and experience from Trump’s first term will complement Bessent’s leadership. Together, they are expected to drive impactful changes in tax policy and regulatory oversight, underscoring the administration’s focus on economic expansion and deregulation.
The Federal Reserve
While Jerome Powell’s term as Fed Chair continues until 2026, the administration change could impact other key positions. Governor Michelle Bowman emerges as a potential candidate for an enhanced regulatory role, suggesting a more balanced approach to supervision. And, while Fed Vice Chair for Supervision Michael Barr has stated his intention to complete his full term through July 2026, the transition team has explored options regarding his supervisory role.
The Securities and Exchange Commission
The SEC, currently led by Democratic Chair Gary Gensler, is poised for a significant shift as Gensler announced he will step down in January. President-elect Trump has nominated Paul Atkins, a former SEC Commissioner known for his lighter-touch regulatory stance and advocacy for financial innovation, including cryptocurrencies, to lead the agency. Atkins’ appointment is expected to reverse the current stringent regulatory regime, potentially easing oversight, particularly in the crypto sector. This shift has been welcomed by many on Wall Street and in the crypto industry, though it raises concerns among progressives about investor protection.
Consumer Financial Protection Bureau
Just a few years ago, the U.S. Supreme Court granted the president expanded authority over the Consumer Financial Protection Bureau (CFPB), allowing the director to be fired at will. President-elect Trump is expected to remove Democratic CFPB Director Rohit Chopra immediately upon taking office. A potential dispute could arise over who serves as acting director, as seen in 2017 when the Trump administration cited the Federal Vacancies Reform Act to install an interim director, while the agency’s deputy director argued Dodd-Frank gave her that role. A district court sided with Trump, and experts believe he could successfully cite both this ruling and the Supreme Court decision to assert his authority to appoint an acting director, with a permanent replacement requiring Senate confirmation.
Other Key Appointments and Their Implications
- Scott Bessent as Treasury Secretary: Bessent plans to make first-term tax cuts permanent and eliminate taxes on tips, Social Security benefits, and overtime pay. His Wall Street-backed approach suggests a pro-business agenda.
- Howard Lutnick as Commerce Secretary: Lutnick supports Trump’s tariff policies aimed at reducing trade deficits and potentially replacing income tax revenue. His role includes oversight of agencies like the Bureau of Economic Analysis.
- Elon Musk as Co-Leader of the Department of Government Efficiency (DOGE): Musk aims to cut $2 trillion in government spending and reduce regulatory burdens by 2026. His efforts are expected to impact various industries, including financial services.
- Kevin Hassett as National Economic Council Director: Hassett is a key advocate of Trump’s tax policies and will likely focus on renewing and expanding tax cuts.
- Jamieson Greer as U.S. Trade Representative: Greer’s tariff-focused trade agenda aims to reduce trade deficits and boost domestic manufacturing.
Conclusion
As the Trump administration prepares to take office, the financial services industry, and particularly the trust sector, faces a period of transformation. Leadership changes at key regulatory agencies, including the OCC, FDIC, SEC, and CFPB, combined with a pro-business, deregulatory agenda, signal significant shifts in oversight, compliance, and operational priorities. While the administration’s emphasis on tax cuts and economic growth may create opportunities for innovation and expansion, trust professionals must remain vigilant to the challenges posed by these changes, such as evolving fiduciary standards and regulatory unpredictability.
The road ahead requires a proactive approach, with trust professionals engaging in open dialogue with regulators, staying informed on policy developments, and adapting strategies to align with new standards. By balancing innovation with ethical responsibility, the industry can not only navigate this new landscape but also continue to serve clients effectively in a rapidly changing environment. The Trump administration’s policy direction presents both challenges and opportunities, making preparedness and agility key to success.
Published December 3, 2023 10:47PM
Updated, December 6, 2023 11:42AM