Broad US financial deregulation is unlikely
Subject Outlook for US financial regulation. Significance Richard Cordray will step down as the head of the US Consumer Financial Protection Bureau at the end of the month. Office of Management and Budget Director Mick Mulvaney, a harsh critic of the consumer watchdog, is the front-runner to replace him, possibly as acting head as that would avoid the need for Senate confirmation. President Donald Trump and Republican congressional leaders are keen to remove what they see as burdensome post-2008 regulation of financial services, but legislative change is proving difficult, so Trump is using appointments and executive powers to advance a deregulatory agenda. Impacts Global monetary policy divergence is both a bigger threat and opportunity for financial markets than US banking reform. The divergence in US regulatory direction from that of international regulators may cause even minor US reforms to have outsized effects. Some US banks will see higher profitability, albeit in line with higher riskiness, but the overall impact on banking activity will be minor. More repatriation of US banking activity will impact London’s financial markets, and the outflow could be exacerbated by Brexit uncertainty.