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Here's How Trump Should Approach Banking Deregulation

Donald Trump campaigned on taking the axe to what he sees as the main impediments of America's growth prospects.

During the campaign, two industries were cited as being ripe for deregulation: banking and energy.

But judging by the sheer number of banking executives Trump has tapped for cabinet positions, it's banking's sprawling regulatory regime that's likely first on the chopping block.

What Trump said on the campaign trail versus what he's saying now – and what his cabinet picks are likely telling him – will have a huge impact on how this goal is achieved, and what – if any – upside there is for investors.

Here's how I see "Government Sachs" playing it…

21st Century Glass-Steagall: Bringing Back the Firewall

Before he was elected, candidate Trump's website said, "It's time for a 21st Century Glass-Steagall."

In other words, Trump wanted to somehow revert to the 1930s-era legislation that separated investment banks and trading operations from the commercial banks where depositors actually parked their savings.

banking deregulationThe Financial Services Modernization Act of 1999, which tore down the last remaining vestiges of the old Glass-Steagall Act (principally to smooth the way for the illegal 1998 Citibank and Travelers Insurance merger), was spearheaded by the Treasury secretary at the time, Robert Rubin. The former Goldman Sachs CEO would earn over $100 million when he subsequently joined Citigroup.

Trump even wanted his call for a 21st century Glass-Steagall to be a plank in the Republican Party's 2016 platform. It wasn't.

In August, Trump called for a moratorium on new bank regulations. His supporters said it wasn't at odds with his call for a revamped Glass-Steagall, but a signal that overregulation was different than prudent regulation.

After berating Hillary Clinton on the campaign trail for taking money from the likes of Goldman Sachs and being in the pocket of big banks, once elected he quickly changed his tune.

His post-election website said: "The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation."

President-elect Trump appointed Republican Paul Atkins, a former Securities and Exchange Commissioner and deregulation advocate, to lead his Financial Services Policy Implementation team.

Soon after, Trump tapped former Goldman Sachs alum Steven Mnuchin as Treasury secretary and current Goldman President and COO Gary Cohn as director of the National Economic Council.

Stephen Bannon, Trump's chief strategist, and Anthony Scaramucci, his principal Wall Street backer, are both Goldman alums.

President-elect Trump's website no longer mentions Glass-Steagall.

It's an idea that has staying power, though.

Killing Dodd-Frank Might Be Easier Said Than Done

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About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Short-Side Fortunes, Shah shows the "little guy" how to make massive size gains – sometimes in a single day – by flipping large asset classes like stocks, bonds, commodities, ETFs and more. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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  1. Wayne Salhany | December 19, 2016

    I think you have something there. I would up the ante. Provide for REAL prison sentences and stop the stupid and ineffectual money consequences for proven fraud.

  2. Richard Pethoud | December 19, 2016

    He should do away with the Federal Reserve and make the banks stop bailing out the corporations.

  3. James Frost | December 19, 2016

    When are we going to quit trying to help business but help the consumer. No business has ever created one job or helped the economy. Only spending consumers have done this. When we stop eloping business and start helping consumers we will all prosper.

  4. Annie | December 20, 2016

    We need to through the book at fraud of all sorts. we have the laws but never manage to prosecute them.
    We so desperately need to dissolve the Federal Reserve, putting gold as our monetary standard not oil based notes. Oil is good for many things but not for currency. Pepper is worthless silver and gold everyone wants and has value…

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