Trump expected to roll back some Dodd-Frank regulations, Fed hikes rates
It’s a good time to be a banker.
President Trump is expected to roll back some of the financial regulations that were put into place during the Obama administration.
And the Federal Reserve is expected to give banks another gift Wednesday in the form of an interest rate hike. Higher rates tend to make loans to people and businesses more profitable for big banks.
That’s made investors giddy. Bank of America’s (BAC) stock has soared 15% this year. JPMorgan Chase (JPM) is up 6% and not far from an all-time high. So is scandal-ridden Wells Fargo (WFC).
And a top bank ETF, the Financial Select Sector SPDR (XLF) fund, is up 7% in 2017.
So how much longer can the bank party last?
Trump expected to be more friend than foe
It’s still not clear how Trump may seek to change the package of regulations known as Dodd-Frank. But he signed two directives last month after meeting with bankers — and that has made investors more confident.
One called for a review of the Wall Street reform law, and the other delayed the implementation of what’s known as the fiduciary rule, a regulation that requires financial advisers to put their clients’ best interests first — not those of their firms.
JPMorgan Chase CEO Jamie Dimon, arguably the nation’s best-known and most respected banker, has expressed optimism about the changes in Washington, too.
He said in the bank’s earnings release in January that “there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities.”
Dimon is one of 16 CEOs on Trump’s Strategic and Policy Forum, an advisory group that includes IBM (IBM, Tech30) CEO Ginni Rometty, Disney (DIS) CEO Bob Iger, GM (GM) CEO Mary Barra and Walmart (WMT) CEO Doug McMillon.
