Like many of you, I’m still digesting the election results and mulling what it will mean for financial regulation. At the least, here are my early expectations:
- Administrative agencies may focus on repealing existing rules over crafting new ones to address problems. We saw this with the last Trump Administration and I’d expect to see more of the same.
- The Trump Administration will likely move to exert more political control over civil servants. At the end of the last Trump Administration, President Trump issued an Executive Order aiming to exclude many more federal employees as outside the ordinary civil service rules. President Biden revoked it on taking office. If reinstated, Schedule F would cover “[p]ositions of a confidential, policy-determining, policy-making, or policy-advocating character not normally subject to change as a result of a Presidential transition[.]” Essentially, the Trump Administration may seek to take political control over any federal employees involved in policy work. This would cover a huge swath of federal employees.
- The independence of the SEC will be tested. There are two ways I can see this happening. First, Chair Gensler could decline to resign and simply serve out his term. President-elect Trump has promised to fire him. But it’s not entirely clear to me that he can be fired without cause. By staying at his desk, Chair Gensler could bring clarity to whether the SEC does enjoy for-cause removal protection. Of course, if Gensler resigns, someone else will take the job. That person also stands a good chance of getting fired because the prior Trump administration included regular firings and turnover. If some new SEC Chair decided to resist termination, we’d also get an answer to this question.
- Climate-related rules are likely to be watered down or rolled back.
- Enforcement priorities may shift away from crypto-related frauds and scams.
- The Federal Reserve may lose independence.
- Self-regulatory organizations may face greater risks that courts will question their status.