Bank stocks are in the red today as the Trump transition team is considering bold moves to shrink or even remove U.S. bank regulators, including the Federal Deposit Insurance Corp. (FDIC), according to The Wall Street Journal. Indeed, talks with potential nominees to lead agencies like the FDIC and the Office of the Comptroller of the Currency (OCC) explored moving deposit insurance oversight to the Treasury Department.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Such changes would require congressional approval, and while reorganizing agencies isn’t new, eliminating a key regulator like the FDIC would be unprecedented. It is no secret that Trump is pushing to cut government size and ease financial industry oversight. Ideas from Trump’s advisers and the Department of Government Efficiency (DOGE)—led by Elon Musk and Vivek Ramaswamy—include merging the FDIC, OCC, and parts of the Federal Reserve.
Musk has also called for eliminating the Consumer Financial Protection Bureau (CFPB), an agency Republicans have long criticized. However, critics argue that banks value having dedicated regulators and fear streamlining could result in inefficiencies or weakened oversight.
Changes Would Face Major Hurdles in Congress
Implementing such sweeping changes would face major hurdles in Congress and resistance from the industry. While some bank leaders and former officials, like ex-FDIC Chair Sheila Bair, support regulatory alignment, they acknowledge it’s difficult to achieve. Banks also appreciate having regulators tailored to their specific needs, especially as technology advances.
Historically, major regulatory changes only occur after crises, like the post-2008 reforms under Dodd-Frank, therefore making Trump’s plans a steep uphill climb without bipartisan support.
What Is the Best Bank Stock?
Turning to Wall Street, out of the bank stocks pictured below, analysts think that Bank of America stock (BAC) has the most upside potential at almost 13%. Conversely, analysts expect the least out of Morgan Stanley (MS) at less than 1% upside potential.
