Angelo Katsoras on Trump's deregulatory agenda

One of Trump's first actions after being sworn in on Jan. 20, 2025, will be to begin unilaterally rolling back certain environmental policies through executive orders.  These include initiating withdrawal from the Paris Climate Accord, streamlining the permitting process for drilling on federal lands, expediting approval of natural-gas pipelines and liquified-natural-gas export facilities, and removing emissions and clean energy targets.  He will seek also to lighten the regulatory footprint in the financial, IT, energy, and mining sectors.

It is important to note that repealing, implementing, or rescinding new executive orders can be a lengthy process.  It often takes months or even years to review and respond to potential legal challenges.  Typically, these challenges are first heard in federal district courts.  The more these cases are heard by judges appointed by Republicans, the better the chances that these executive orders will not be overturned.

~ Angelo Katsoras, Geopolitical Briefing, National Bank of Canada, November 6, 2024

Wall Street Journal: "Do Republicans want to rein in the regulatory state or unleash it?"

Do Republicans want to rein in the regulatory state or unleash it?  It’s hard to tell these days, and the contradiction comes into sharp focus in J.D. Vance’s embrace of Lina Khan, Elizabeth Warren’s favorite regulator who runs the Federal Trade Commission.  At a Bloomberg technology forum in February, Mr. Vance called Ms. Khan “one of the few people in the Biden administration that I think is doing a pretty good job.”

~ WSJ editorial board, "J.D. Vance, Lina Khan and the GOP’s Economic Contradictions," The Wall Street Journal, July 18, 2024

Kevin Duffy on the Trump rollback of Dodd-Frank in 2018

As fate would have it, Silicon Valley Bank CEO Greg Becker lobbied in 2018 to raise the asset bar on the annual Dodd-Frank stress tests from $50 billion to $250 billion.  On May 24, 2018, when President Donald Trump signed “the biggest rollback of bank rules since the financial crisis,” SVB’s assets footed to $54 billion.  By the end of last year, they had mushroomed to $212 billion. 

Never mind that the rollback bill was signed by 33 Democrats in the House and 17 in the Senate.  The Left had its perfect scapegoat.  “Back-to-back collapses came after deregulatory push,” claimed The New York Times, shortly after the FDIC took control of SVB and Signature Bank, the second and third largest U.S. bank failures in history. 

Would it have made any difference?  The architects of the 2010 Dodd-Frank Act put in place a set of rules to prevent another mortgage crisis, never imagining that the next crisis would change its spots.  Truth be told, subjecting SVB to a rash of annual stress tests would not have saved the day.  Bank regulators have been looking for trouble in all the wrong places. 

~ Kevin Duffy, "Would Stress Tests Have Prevented the Failure of SVB? Probably Not," Mises.org, April 3, 2023

Michael Hiltzik blames SVB failure on "skittish depositors" and "paper losses" in bond portfolios

SVB's fundamental problem was that it had a huge number of skittish depositors, most of whose money was uninsured by the FDIC and could be withdrawn on demand, and had invested those deposits in treasuries and bonds that were generally safe, but wouldn't mature in less than 10 years.  After a series of interest rate hikes, the bonds were showing immense losses on paper.  When the depositors pulled their money — to the tune of $42 billion on March 9 — the bank couldn't liquidate its bond portfolio in a way that wouldn't convert its paper losses to real losses, so it ran out of money to pay the depositors.

~ Michael Hiltzik, "How Trump's frenzy of deregulation killed Silicon Valley Bank," Los Angeles Times, March 30, 2023

Kevin O'Leary: "I have never seen a better environment in America, ever" (2019)

In all the years I've been an investor in private and public companies, I have never seen a better environment in America, ever.  And it's not because of tax reform.  It's deregulation over the last three years has set free all of my small cap companies in a way I've never seen... Whatever Washington is doing, keep the policy the same.

~ Kevin O'Leary, Markets Now interview, November 24, 2019

Janet Yellen ready to blame the next financial crisis on deregulation

I am worried that we are in a deregulatory mode and I see a lot of pressures building in the system to go further to really weaken fundamental safeguards that were created in Dodd-Frank. We are a decade after the financial crisis so that would be worrisome and wrong to do.

~ Janet Yellen, speech at Women in Housing and Finance holiday event, "Janet Yellen is worried about the next financial crisis," MarketWatch.com, December 13, 2018

Time proclaims end of an era of tax cuts and deregulation

Economic eras don't last forever, though, and there are signs that the current slowdown is a harbinger of something bigger: an end to America's 25-year love affair with tax cuts and deregulation.

~ Time (cover), "The New President's Economy Problem," May 26, 2008, by Justin Fox

BusinessWeek on the repeal of Glass-Steagall

The implications of the new law [the repeal of Glass-Steagall] are enormous. For instance, like other deregulated businesses, a merger frenzy of potentially unprecedented scale and scope is likely to be unleashed in the financial-services industry. Regulators rightly worry that these new behemoths will be considered too big to fail, encouraging their managements to throw the dice by lending recklessly throughout the global economy. These companies would profit handsomely if the gambles pay off, and taxpayers pick up the tab if they don't -- shades of the 1980s savings-and-loan crisis.

~ BusinessWeek Online, "Goodbye Glass-Steagall, Hello Big Mergers -- and Big Fees?," October 29, 1999