Trump’s Changes Boost Big Banks and AI Carry Market Risks
November 3, 2025—Deregulation of industry is a significant feature of Trump 2.0. In his second term, President Donald Trump is signing executive orders and presidential memoranda that require agencies to pause, review, or repeal rules affecting energy production, air quality, environmental protection, and banking. In the financial sector, the Trump administration is:
- Reducing the amount of cash banks need to hold (a.k.a. capital requirements).
- Cutting certain exam requirements for small, community banks effective Jan. 1, 2026. These relate to the National Flood Insurance Program, fair lending risk assessments, and other regulatory requirements. (See the Office of Comptroller of the Currency, https://occ.gov/news-issuances/bulletins/2025/bulletin-2025-24.html)
- Scale back supervision on non-traditional finance models, such as fintech, and digital assets, including cryptocurrencies and blockchain technology. Trump revoked a Biden administration order regulating digital assets. (See Executive Order 14067, and the White House statement revoking it, https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/)
Meanwhile, the U.S. Federal Reserve is planning to reduce its staff supervising banks by 30 percent, from 500 to 350 employees by the end of 2026. (See the Financial Times reporting October 30, https://www.ft.com/content/279a535b-aa3d-4974-8466-f6b7402fdd12)g
Boost to Wall Street’s Big Banks and AI
The big winners are Wall Street banks, big tech companies, and artificial intelligence (AI). Why? Because it allows big banks and other financial institutions to invest equity rather than hold it. The “unprecedented easing of capital rules” is set to free up trillions of dollars for new loans, the FT’s Martin Arnold reported. One estimate suggests $2.6 trillion in cash that banks are currently required to hold to protect consumers could be redirected towards new lending.
“The reduction of capital requirements is set to reinforce the dominant position of big Wall Street groups, boost their capacity to finance huge investments in AI and data centers and allow them to return more capital to shareholders,” the Financial Times reported in October.
https://www.ft.com/content/8c69189c-7594-4612-bf29-0847ed995d98
In October, JP Morgan, one of the largest banks, announced plans to invest $1.5 trillion in critical minerals, defense and aerospace, the energy industry, and AI.
https://www.jpmorganchase.com/newsroom/press-releases/2025/jpmc-security-resiliency-initiative
In announcing the plans, CEO Jamie Dimon cited concerns about U.S. national security.
“America needs more speed and investment. It also needs to remove obstacles that stand in the way: excessive regulations, bureaucratic delay, partisan gridlock and an education system not aligned to the skills we need,” Dimon said.
Risk Factor
The downside to deregulation is the increased risk to consumers and the potential instability in financial markets and the global economy.
In October, JP Morgan’s Dimon told the BBC he was “far more worried” about increased risks in the U.S. stock markets than others. He cited geopolitics, fiscal spending, and remilitarization of the world. See the BBC story, https://www.bbc.com/news/articles/cg5ej03p604o
Others in the industry warn that the risk of systemic shock is a real concern. For example, Michael Hsu, a banking regulator during the Biden administration, said deregulation might be setting the stage for a financial crisis. (See reporting in The Banker, https://www.thebanker.com/content/46bfe7be-ffe0-44f3-b2ed-9d1f5408aa61)
“The worry is—are we at risk of planting the seeds of the next 2008? I think the risk is there. The question is: what are we going to do about it?”
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