Trump is reportedly looking into overhauling banking regulators

Trump is reportedly looking into overhauling banking regulators

Newly elected President Donald Trump’s transition team is reportedly considering sweeping structural changes to the banking watchdogs, which have the potential to impact the mortgage market.

Analysts expected a shift toward a more accommodative regulatory environment for the financial sector under the new Trump administration, but recent discussions indicate that even more drastic measures are on the table. The transition team is exploring ways to reduce, consolidate or even eliminate the top bank watchdogs. The Wall Street Journal reported after speaking to people familiar with the matter.

Advisors and officials from the yet-to-be-established Department of Government Efficiency (DOGE) have asked potential nominees to lead the Federal Deposit Insurance Corp. (FDIC) on whether Trump could abolish the regulator and whether bank deposit insurance could be included in the Ministry of Finance. These questions were also asked to candidates for the Office of the Comptroller of the Currency (OCC).

This comes after a series of bank failures last year, which culminated in banks calling for broader deposit insurance protections.

Trump advisers have reportedly explored consolidation or restructuring of the FDIC, the OCC and the US Federal Reserve. An alternative proposal proposes designating one of these agencies to oversee banking regulation, while limiting the others to non-regulatory functions.

These agencies play a critical role in the mortgage industry, influencing areas such as guidance on addressing reconsideration of value processes (ROV) for residential real estate transactions, the development of the new Community Reinvestment Act (CRA) rules, and regulatory actions that impact on the sector, among other things.

Bill Killmer, senior vice president of legislative and political affairs at the Association of Mortgage Bankers (MBA), said in a statement that “the trade group supports reducing or eliminating overly burdensome and duplicative regulations.”

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In addition, the MBA “has always supported efforts that would help banks re-enter the mortgage market,” Killmer said. But he added that “proposals to consolidate or eliminate any government agency would require congressional approval.”

“MBA is committed to working with the new administration and Congress on common-sense policies and solutions that make housing more available and affordable, while underscoring the importance that banking regulators do all they can to protect real estate markets and the broader to support the economy.”

The news follows a call from Elon Musk, the world’s richest man and owner of companies such as Tesla, SpaceX and the social media platform X – dismantling the Consumer Financial Protection Bureau (CFPB). Musk has been appointed to lead DOGE along with former Republican presidential candidate Vivek Ramaswamy.

This week, CFPB Director Rohit Chopra indicated he has no plans to resign, but said he understands Trump can fire him at will.

As for the CFPB, Trump’s transition team is exploring the possibility that consumer education jobs could replace regulatory and supervisory jobs, according to The Wall Street Journal. Trump would make it easier to fire workers by reinstating stricter Schedule F return-to-the-office policies.

Editor’s note: This story was updated after publication with comment from the Mortgage Bankers Association.