Post-Dodd-Frank World Maybe Not All It’s Cracked Up To Be

Curb your Trumpthusiasm.
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So Wall Street, which was betting on an economic apocalypse when it became clear that President Trump was about to be a reality, is now awash in dreams of a world without regulation. After all, did not Candidate Trump promise to tear up Dodd-Frank on the steps of the Capitol immediately after saying the words, “So help me God”?

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Here’s the thing, though: Even if he did, it might not be the hoped-for paradise, and by the time it was, they wouldn’t get to enjoy it until the potential tail end of the Trump Administration.

A Bank of England working paper published last year studied how banks deal with regulatory change. It found that it takes about three years for banks to adjust to new rules.

So any big changes in bank regulation threaten to restart the clock, pausing profit growth as bank executives tweak business models around new guidelines.

Then there’s this.

What’s more, the platform adopted at the Republican convention calls for a restoration of the Glass-Steagall rules separating commercial banking from investment banking.

That’s not exactly the post-regulatory free-for-all banks seem to be betting on. But it did happen, even if junior tried to walk it back the next day, and - after all - neither facts nor previous statements have any bearing on President Trump. Still, no one believes that it’ll happen, so rally on.

While few on Wall Street expect that to become law, the possibility can’t be completely discounted.

Dodd-Frank Repeal: It Isn’t All Benefit, No Cost for Banks [WSJ]
Bank Stocks Surge on Hope Trump Lightens Regulatory Load [WSJ]

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