Trump’s Potential Top Banking Regulators Tease Lighter Regulatory Touch
FDIC Vice Chairman Travis Hill to call for no change in capital requirements for largest banks in Friday speech
President-elect Donald Trump has yet to name his picks to head Washington’s banking agencies, but possible nominees for key posts are already teasing a pullback of regulations and embrace of technologies such as cryptocurrency.
Federal Deposit Insurance Corp. Vice Chairman Travis Hill is expected to outline plans to lessen the regulatory burden on banks, encourage innovation around crypto and address the issue of so-called debanking in a speech Friday morning, according to prepared remarks viewed by The Wall Street Journal.
He also plans to advocate for regulators to pull back on previous proposals to force banks to hold more capital.
Hill, who is poised to become the acting chairman when FDIC Chairman Martin Gruenberg steps down the day before Trump’s inauguration, is set to speak at an American Bar Association event in Washington.
He is one of two Republicans on the agency’s five-member board and is seen as a potential pick for the permanent role.
“The agency needs a new direction,” Hill plans to say. “And—one way or another—I expect that work to begin on January 20th.”
Bank executives are optimistic that Trump will ease a host of regulations on capital cushions and consumer protections, as well as scrutiny of consolidation in the industry. The Trump transition team has started to explore pathways to shrink, consolidate or even eliminate the top bank watchdogs in Washington, the Journal previously reported.
Separately, Federal Reserve Gov. Michelle Bowman, one of three Republicans on the seven-member board, had a similar message as Hill in a Wednesday speech at a banking seminar in Laguna Beach, Calif. She said banking supervisors should take a more tailored approach and balance oversight with a desire for economic growth.
Bowman is a candidate to succeed the Fed’s Vice Chair for Supervision Michael Barr, its top banking regulator. Barr said this week he would step down in February, rather than risk a legal fight with Trump to keep the job. He had pushed an aggressive regulatory agenda during his tenure, which sparked fierce pushback from the industry.
Here are some of the highlights from Hill’s prepared remarks:
- Banking supervision: Hill believes FDIC examiners need to move away from a focus on “process-related issues”—an approach he suggests distracted regulators from the issues that caused the collapse in 2023 of Silicon Valley Bank. Instead, he thinks they should focus on core safety and soundness questions.
- Crypto and fintechs: Hill plans to say the current approach toward digital assets at the FDIC has “stifled innovation and contributed to a public perception that the FDIC is closed for business if institutions” are interested in related technologies. He argues that the FDIC should take a more open-minded approach to technology adoption and lay out clear guidance for what activity is permissible.
- Debanking: He also intends to address debanking, or banks accused of culling customers associated with certain political parties or industries, including crypto. “There is no place at the FDIC for anyone who has pushed—explicitly or implicitly—banks to stop serving law-abiding customers,” he plans to say.
- Capital requirements: Following a failed attempt by Barr to enact stricter capital requirements on the largest banks, Hill supports a new, “roughly capital neutral” reworking of the requirements. That means he doesn’t envision requiring those banks to meaningfully increase the amount of capital they hold in case of economic downturns.
- Climate: Hill doesn’t expect the FDIC to issue “any quantitative or qualitative climate disclosure regime” for banks in the U.S. He plans to say he expects the FDIC to withdraw from the Network for Greening the Financial System, a group of central banks and financial supervisors.