How Trump’s “10-to-1” Deregulation Initiative Is Taking Shape in Financial Services
One of President Donald J. Trump’s first actions in his second term outlined a bold strategy on deregulation. Executive Order (EO) 14192, “Unleashing Prosperity Through Deregulation,” laid out details of the administration’s “10-to-1” deregulatory agenda, which states that 10 existing regulations will be eliminated for every new regulation implemented. It intends to reduce burdens on businesses and costs on consumers in order to increase the United States’ global competitiveness and prosperity.
Just a few months into the administration, its deregulatory agenda is charging full steam ahead in the financial services space. Along with Trump’s outspoken—though sometimes contradictory—push for deregulation, Treasury Secretary Scott Bessent has also been a vocal advocate. In fact, he has taken the lead on banking and finance deregulation as chair of the Financial Stability Oversight Council (FSOC), a committee comprising the heads of most of the country’s primary financial regulatory agencies.
Let’s look at some of the top deregulatory initiatives, both active and proposed.
Curtail Consumer Financial Protection Bureau (CFPB) Operations
A favored punching bag of the small-government minded, the CFPB faces several major regulatory changes following years of excessive use of authority. The agency’s chief legal counsel, Mark Paoletta, sent a staff memo in which he detailed a shift in priorities—namely, directing enforcement and supervisory activities to focus on active service members and veterans. Interestingly, the memo notes that consumer harms can be more effectively resolved at the state level. It also says the CFPB will narrow its focus to depository institutions—a major shift from activities pursued under the leadership of Biden-appointed director Rohit Chopra and a signal of regulatory relief for sectors like fintech.
Following the administration’s lead, House Financial Services passed a bill that would reduce CFPB funding by about 60 percent. The agency operates under a unique funding structure outside of appropriations, receiving funding from the Federal Reserve System (“the Fed”) with additional monies from fines levied on financial institutions. The bill would statutorily reduce the maximum amount the agency can receive from 12 percent to 5 percent. This is in addition to various rules rescinded or struck down so far this year, including the Overdraft Fee Rule and Credit Card Late Fee Rule, as well as other attempts to reduce the agency’s size and regulatory scope.
Abolish the Federal Deposit Insurance Corporation (FDIC)
Members of the Trump administration have reportedly indicated their desire to eliminate the FDIC, potentially shifting its functions to the Treasury Department. This would likely require congressional authorization, making it an uphill battle with thin Republican margins in both chambers and at least some expressing hesitation at the idea.
This is in stark contrast to a Biden administration proposal that sought to raise the FDIC limit from $250,000 to a “targeted coverage” approach for business accounts. It was a response to the failures of Silicon Valley, First Republic, and Signature banks following the Fed’s rapid quantitative tightening in 2022-2023 and the deterioration of unrealized losses (and subsequent depository flight). Such proposals would increase reliance on government, unintentionally encourage riskier behaviors, and disproportionately benefit wealthier individuals.
Eliminating the FDIC would reduce the number of regulatory agencies, reduce waste, and streamline financial regulation more broadly, allowing greater regulatory cohesion within the executive branch. Still, opponents of the administration’s plan note that eliminating the FDIC could deteriorate trust in the banking system and that absorption by the Treasury could open up deposit insurance policy to political influence.
Abolish the Public Company Accounting Oversight Board (PCAOB)
In a deregulatory push requested by the Trump administration, the House Financial Services Committee passed legislation that would abolish the PCAOB and wrap its functions into the Securities and Exchange Commission (SEC). A lesser-known participant in financial oversight, the PCAOB oversees audits of public companies to the benefit of investors and the public. The push to eliminate the board and have the SEC absorb it is driven in part by the fact that the PCAOB is not a government entity, but a nonprofit established by Congress. This has led Republicans to seek its elimination in the name of congressional accountability and oversight as well as broader pushes to reduce regulatory overreach.
Halt Basel III Advancement
Following Trump’s win in November, and in line with traditional operations of federal agencies following elections, financial regulatory agencies (with the exception of CFPB) committed to halting proposed regulatory changes, including Basel III. Most notably, the Basel framework—of which Basel III is the most recent iteration—would raise capital requirements on banks globally based on guidelines from the Basel Committee on Banking Supervision (BCBS), an international standard-setting body. Because the BCBS has no jurisdiction in the United States, the Fed released a detailed proposed framework for U.S. compliance under the Biden administration.
Lending to the idea that the financial regulatory landscape is unnecessarily complex and intertwined, the Office of Comptroller of the Currency (OCC) and the FDIC joined in the supervision of Basel. Since the halt, Federal Reserve Chair Jerome Powell has expressed interest in continuing implementation, though possibly in a scaled-back form, and former Vice Chair Michael Barr suggested a lower capital requirement. However, Trump-appointed FDIC Vice Chair Travis Hill has openly expressed his displeasure with the Basel III proposal. Further, one of Trump’s first actions as president—an EO titled “Regulatory Freeze Pending Review”—stalled progress, and the administration has effectively halted any further advancement of the Basel framework, signaling their unwillingness to allow an international body to regulate U.S. banks.
Relax Crypto Regulations
Among the president’s campaign promises was making the United States the “crypto capital of the planet.” Toward this end, the administration has taken steps to establish a cohesive regulatory framework, initially through an EO titled “Strengthening American Leadership in Digital Financial Technology.” This also revoked a 2022 EO from the Biden administration titled “Ensuring Responsible Development of Digital Assets.” Most notably, Trump’s EO rescinded a Biden-era SEC rule that required entities safeguarding crypto assets to report them as a liability on their balance sheet. The SEC under Trump-appointed Chair Paul Atkins also paused and withdrew from several enforcement actions against major players in the crypto space, including Coinbase and Binance.
Privatize Fannie Mae and Freddie Mac
A major deregulatory shift being pursued is privatizing Fannie Mae and Freddie Mac, the federally backed government-sponsored enterprises (GSEs) that buy and guarantee mortgages. A longstanding agenda item for Republicans, the latest news suggests the administration is considering an EO to study the effects of privatization. According to Bessent, one idea on the table is raising funds in an initial public offering-type structure, with the federal government retaining a significant stake in the GSEs. This would serve as the basis for a sovereign wealth fund—a first at the federal level. Federal Housing Finance Agency Director William Pulte has overhauled both GSEs in major ways, and the degree to which the Trump administration appears to be moving forward suggests that more changes may be coming—though an act of Congress will almost certainly be required.
Prohibit Debanking and Reputational Risk
A recent hot-button issue centers on debanking. As detailed in a previous R Street piece, a primary driver of debanking is the standard of “reputational risk,” which encourages banks to close accounts out of fear of fines or penalties for doing business with individuals and groups deemed unsavory by federal regulators. As recently as March (and at Bessent’s insistence), both the OCC and the FDIC have agreed to do away with the reputational risk standard in light of the controversy surrounding politically motivated debanking. Congress has followed suit, with Senate Banking Chairman Tim Scott (R-S.C.) introducing the FIRM Act, which would prohibit federal regulators from considering reputational risk.
Ease Bank Regulations
As FSOC chair, Bessent has significant influence over all three primary bank regulators: the Federal Reserve, the OCC, and the FDIC. He spoke in broad terms on a recent podcast appearance about the administration’s intention to ease bank regulations in order to relieve some of the pressures they face. He also verbalized his displeasure with the Fed’s recent role in banking regulations and his hope that they maintain independence in monetary policy.
Other Regulatory Changes
Other regulatory changes that may signal things to come include Trump’s firing of Democrat-appointed members of the National Credit Union Association and the Federal Communications Commission, myriad leadership replacements within the Federal Housing Finance Agency and others, regular staff cuts made through the Department of Government Efficiency, and other standard deregulatory measures.
Looking Ahead
The Trump administration appears to have chosen a strategy of rapid movement to accomplish its “10-to-1” deregulatory agenda, acting through both the executive and legislative branches. Given the president’s ambitious goals, this strategy is not just effective—it is necessary. The administration’s ability to accomplish meaningful change may be severely limited should the congressional makeup shift following the 2026 midterm elections. Of course, long-lasting, impactful change is far more challenging to accomplish without Congress. In addition to the issue of EOs immediately being undone by the next president, overuse of executive authority is a serious concern. It encourages each newly elected president to exercise even more power than the last, essentially eroding the separation of powers and checks and balances. It is therefore ideal for the administration to advance their deregulatory agenda as rapidly as possible.