The Trump administration has rolled back a broad range of banking guidance and regulatory proposals made in the last few years, and while bankers are used to regulatory whiplash when administrations change, it is possible some of changes will be long term, according to American Bankers Association policy experts.
During a panel discussion on policy at the ABA Risk and Compliance Conference in Indianapolis, ABA’s top regulatory and compliance executives listed several regulatory rollbacks made by the administration in the first half of the year, including announcing intentions to rewrite rules regulating small-business lending data collection (Section 1071) and financial data sharing (Section 1033).
“There’s a lot of anxiety over uncertainty and the pace of change, but I think you have to separate that anxiety, which we all share, with realizing that we’re in a very, very good place in terms of regulatory rollbacks,” said Ginny O’Neill, EVP for regulatory compliance and policy at ABA.
Part of the reason for the rapid pace of change is that the administration has given Treasury Secretary Scott Bessent a central role in coordinating bank policy, according to ABA President and CEO Rob Nichols.
“On the regulatory side, he gave a big speech at the ABA [Washington Summit] and said, ‘I’m going to coordinate all of this rulemaking going forward.’ That is not a typical role that Treasury plays,” Nichols said. “When I served as assistant U.S. Treasury Secretary, we were very hands off on the regulatory side. This Treasury is quite different.”
Economic and regulatory uncertainty
While many bankers welcomed the Trump administration’s deregulatory agenda, President Trump has also pursued a broad tariff push that is complicating the economic outlook, according to ABA Chief Economist Sayee Srinivasan.
“It has introduced a huge amount of uncertainty for not just banks, but the customers of the banks,” Srinivasan said.
Another area of uncertainty is regulation. One concern expressed by bankers at the conference and elsewhere is that some states could respond to the federal regulatory rollbacks by passing new laws, creating a patchwork of banking regulation across the county. Hugh Carney, EVP for financial institution policy and regulatory affairs at ABA, said one recent trend is state laws prohibiting alleged “debanking.” Another is interchange fees, with Illinois last year adopting a first-of-its-kind law prohibiting banks and others from charging or receiving interchange fees on the portion of a debit or credit card transaction attributable to tax or gratuity. ABA is challenging the Illinois law in court.
ABA is working with its state bankers association partners on heading off such legislation, Carney said. The association is also working with the Office of the Comptroller of the Currency to defend national preemption — an effort that received a boost recently when Acting Comptroller Rodney Hood issued a statement defending the preemption.
“The OCC has been very active on that front,” Carney said. “And from where I sit, this is an incredibly important issue because we have a very politically divided country. National bank preemption is a way of maintaining national economic integration.”
Building the future
The goal is to build rulemaking in the next few years that is easily defensible and can withstand future changes in administrations, according to the panel. At the same time, some of the changes currently taking place won’t be so easy to reverse. For example, the administration is seeking to scale back the staff size of the Consumer Financial Protection Bureau, leaving it a leaner, possibly more focused agency.
“I’m hopeful what will emerge as they rebuild [the CFPB] is a much more moderate agency that uses all of its tools and is less antagonistic to large banks,” O’Neill said.
