Key Points
- Big banks are navigating a complex relationship with the Trump administration.
- They are competing for a role in the massive Fannie Mae and Freddie Mac IPO.
- At the same time, they face scrutiny over “debanking” conservative customers.
- The administration is rolling back some post-crisis banking regulations.
America’s biggest banks are in the middle of a delicate balancing act in President Trump’s Washington. On one hand, they are competing for a piece of a massive and lucrative deal to take mortgage giants Fannie Mae and Freddie Mac public. On the other hand, they are facing intense scrutiny from the administration over accusations of “debanking” conservative customers.
It’s a “very complicated battlefield,” as one industry insider put it.
The big banks started the Trump administration with high hopes for a wave of deregulation, and in many ways, that’s happening. Bank regulators are already proposing the biggest rollback of rules since the 2008 financial crisis. The Federal Reserve is looking to relax key capital requirements and is even hosting a conference to discuss easing the burden on smaller community banks.
But at the same time, the Trump administration has thrown a few curveballs. The White House has been much friendlier to the crypto industry, which is emerging as a major competitor to traditional banks. Now, bank lobbyists are fighting to stop crypto platforms from offering interest on stablecoins, arguing it creates unregulated “pseudo-banks.”
The other big challenge is the “debanking” issue. President Trump has personally called out bank CEOs over the issue and signed an executive order on it.
Regulators are now demanding that the largest banks hand over information about their account closure practices. It’s a tricky situation for the banks, which deny any political discrimination and say they are just managing their financial and legal risks.
