President-elect Donald Trump’s transition team proposed to reduce, consolidate, and potentially eliminate key financial regulators such as FDIC.
The transition team of US President-elect Donald Trump has proposed a major overhaul of the US banking system by trimming down regulatory bodies and abolishing the Federal Deposit Insurance Corporation (FDIC).
Advisers from the Department of Government Efficiency (D.O.G.E.), headed by Elon Musk and Vivek Ramaswamy, proposed the potential reduction, consolidation, and elimination of key financial regulators. Besides, the D.O.G.E. advisers also proposed transferring the deposit insurance responsibilities of FDIC to the Treasury Department. As per their floated plan, they proposed combining the FDIC, OCC, and the Federal Reserve.
As part of this review, DOGE advisors have interviewed candidates for roles in the FDIC and the Office of the Comptroller of the Currency (OCC). Proposals to dismantle the FDIC would require Congressional approval, marking a historic shift in federal oversight by potentially eliminating a legacy agency.
Some banking executives remain optimistic about Trump easing regulations on capital requirements and consumer protections. However, other experts argue that FDIC-backed deposit insurance is important for financial stability. Analysts warned that removing such institutions could be damaging to the overall banking sector.
On the other hand, crypto industry experts are cheering the proposal to eliminate FDIC. They note that the regulator, along with its peers, has played a key role in Operation Choke Point 2.0. “Eliminating the FDIC would bring us one step closer to ending the weaponization of the US banking system and preventing Operation Choke Point from ever happening again,” said Gemini exchange co-founder Tyler Winklevoss.
Donald Trump Advisers Working on Regulatory Overhaul
Trump’s transition team, including Elon Musk, Scott Bessent, and Vivek Ramaswamy, is also considering merging key financial agencies such as the FDIC, OCC, Federal Reserve nonmonetary functions, and the National Credit Union Administration (NCUA).
Commenting on the current proposal, former FDIC Chair Sheila Bair weighed in on the non-feasibility of eliminating a major bank regulator. She noted that banks value their relationships with individual agencies. While speaking to The Wall Street Journal, Bair remarked:
“We could use some streamlining on financial regulation, but it’s really hard to get done. Banks may complain, but they like the status quo and the relationships they’ve built with their regulators.”
Alternative proposals suggest keeping only one primary banking regulator while shifting non-regulatory roles to other agencies. However, experts believe such drastic changes will face significant resistance from Congress and the financial industry, underscoring the challenges in reshaping federal oversight.
Last month, Elon Musk also criticized the abundance of overlapping regulatory agencies, stating that “there are too many duplicative regulatory agencies”. Besides, he also advocated the elimination of the Consumer Financial Protection Bureau (CFPB), an agency established in response to the 2008 global financial crisis.
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