by
N. Peter Kramer
Now as President-elect, he has showed his intent by adding an extensive passage on his website about his proposals to tear up the Dodd-Frank law, 2300 pages’ bank regulations, which came in force in 2010.
Trump has long complained that American banks have been tied up in so much red tape that they have had to throttle the flow of credit to businesses and consumers. He wants bankers to take more risks; which is fine by Wall Street. After Trump’s victory was declared, shares in JP Morgan, Morgan Stanley and Citi Group soared by more than 10%.
Barclays had a similar boost to its stock price, but was a rare exception among European lenders. The loosening of the rules on American banks could mean that Wall Street destroys what is left of Europe’s banking sector. Before the financial crisis Deutsche Bank, Credit Suisse and UBS featured often at the top of the global league tables. This year, US banks dominate every asset class, including bonds, equities and loans, according to Thompson Reuters.
Trumps policies seem designed to let the US seize victory in the global game of investment banking, at the expense, of particularly European rivals. Richard Buxton, CEO of UK equities at Old Mutual Global Investors, said recently in the London Times, ‘Trump’s presidency will be hugely positive for US banks.
They now have scope to expand. We are getting to a point where there won’t be a big European investment bank’. US Banks have a distinctive advantage. They are operating in the world’s largest economy with just one federal regulator.
It seems there is little hope of European banks turning the tide.
