About the Donald Trump administration's financial regulatory approach

About the Trump administration's financial regulatory approach


Hello,


As of May 2025 , the Trump administration's financial regulatory approach emphasizes deregulation, raising concerns about the potential for a financial crisis akin to that of 2008.

Rollbacks of Post-2008 Safeguards

In his first term, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018, which significantly relaxed key provisions of the Dodd-Frank Act. This legislation raised the threshold for banks considered "too big to fail" from $50 billion to $250 billion in assets, thereby exempting many regional banks from stringent oversight measures such as annual stress tests and the requirement to submit "living wills" for orderly resolution in case of failure .

In his current term, the administration has continued this deregulatory trend. The Consumer Financial Protection Bureau (CFPB), established to protect consumers from abusive financial practices, has seen significant budget cuts and a reduction in enforcement actions. A U.S. House panel is considering legislation to further reduce the CFPB's funding and to eliminate the Public Company Accounting Oversight Board (PCAOB), transferring its responsibilities to the Securities and Exchange Commission (SEC) .

Here’s a deeper breakdown of that key financial deregulation measure from the Trump administration's first term:

What Is the Economic Growth, Regulatory Relief, and Consumer Protection Act (2018)?

This law, signed by President Donald Trump in May 2018, was a partial rollback of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which had been enacted in 2010 in response to the 2008 financial crisis. The goal of Dodd-Frank was to reduce systemic risk in the financial system by increasing regulation, oversight, and consumer protections.

The 2018 rollback law was promoted as a way to reduce the regulatory burden on community and regional banks and to promote lending, especially in rural and underserved areas.

The $50 Billion to $250 Billion Change

What it used to be under Dodd-Frank:

  • Any bank with $50 billion or more in assets was deemed systemically important, i.e., “too big to fail.”
  • These banks were subject to strict federal oversight by the Federal Reserve:
    • Annual stress tests to evaluate how they'd handle economic shocks.
    • Living wills, which are plans for how they would be safely dismantled in a crisis without hurting the wider economy.

What the Trump-era law changed:

  • The threshold was raised from $50 billion to $250 billion.
  • That meant that dozens of regional banks, such as Silicon Valley Bank and Signature Bank (which later failed in 2023), were no longer subject to these enhanced regulatory requirements.

Why Experts Were Concerned

  • Stress tests and living wills are preventive tools: they don't stop banks from failing, but they help regulators understand and plan for those failures in ways that don’t ripple through the economy.
  • Critics (including some former Fed officials) warned that exempting banks in the $50–250B range could let "mid-sized but still dangerous" banks grow unchecked.
  • As we saw in the 2023 regional banking crisis, this rollback may have made it easier for some banks to take excessive risks without enough oversight.

In Summary

The Trump administration's 2018 law weakened parts of Dodd-Frank by removing oversight from a swath of medium-to-large banks, which were no longer considered systemically important unless they crossed $250 billion in assets. While the move was intended to promote economic growth and reduce red tape for smaller banks, it also increased systemic vulnerability in ways that echoed the pre-2008 environment.

Embrace of Cryptocurrency

President Trump has shifted from skepticism to strong support for the cryptocurrency industry. His administration has implemented policies to integrate crypto into mainstream finance, including the creation of a strategic bitcoin reserve and the loosening of financial regulations to accommodate digital assets. Critics warn that these moves could increase exposure to volatile markets and encourage regulatory evasion, drawing parallels to the conditions that led to the 2008 financial crisis .

Also , i invite you to read my following interesting article called: "What about the hype around Cryptocurrencies ?":

https://myphilo10.blogspot.com/2025/01/what-about-hype-around-cryptocurrencies.html


Economic Indicators and Risks

The U.S. economy has shown signs of slowing, with a 0.3% GDP contraction reported in the first quarter of 2025. Economists attribute this downturn to the administration's sweeping tariffs and deregulation policies, which have led to reduced business activity and eroded consumer and business confidence .

Conclusion

The Trump administration's current financial regulatory policies prioritize deregulation and market integration of emerging financial technologies like cryptocurrency. While these measures aim to stimulate economic growth, they also reduce oversight mechanisms designed to prevent excessive risk-taking in the financial sector. This approach raises concerns among experts about the potential for a financial crisis similar to that of 2008.


And here is what the AI (Artificial intelligence) from OpenAI called GPT-4o answered me about my above thoughts:

"Your analysis of the Trump administration's financial regulatory approach as of May 2025 is largely accurate and aligns with current developments."

Thank you,
Amine Moulay Ramdane.


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