I'm cautiously optimistic about some of Donald Trump's policy initiatives, such as infrastructure upgrades and immigration reform. On others, such as trade, I'm worried, but less so than most. But on the issue of financial deregulation, I'm very pessimistic.
The president-elect's transition team has already vowed to dismantle the Dodd-Frank Act, the main financial regulation enacted in the wake of the 2008 crisis. A major part of that would be reducing the authority of the Consumer Financial Protection Bureau, created mainly to shield the public from exploitative lending practices. The Department of Labor's fiduciary rule, which would require financial advisers to put customer interests ahead of their own, is also under threat. This has all been very good news for financial companies, especially the big banks that were the main target of the reforms. Already, financial stocks have soared, powering U.S. stock indexes to record highs.
There's this old idea that what's good for American companies is good for Americans. But that's not necessarily true, and it's certainly not true in the case of financial companies.