2016 U.S. Presidential and Congressional Elections: Preliminary Observations and Potential Implications for Financial Services Legislation and Regulation

Sullivan & Cromwell LLP - November 15, 2016

The Republican Party emerged from last week’s elections having won control of the White House and retained slightly reduced majorities in both chambers of Congress. These electoral outcomes could pave the way for the incoming Trump Administration and Congressional Republicans to pursue a financial services regulatory and legislative agenda that may substantially reshape the post-crisis regulatory framework and is certain to result in key personnel changes at the financial regulatory agencies. The potential implications of these changes could be far-reaching for financial services companies of all kinds.

It is still too early to speculate on the exact contours of the Trump Administration’s financial services policy, let alone its interplay with the legislative agenda advanced by Congressional Republicans and the regulatory initiatives of the outgoing Obama Administration. Early indications from the Trump transition team, however, may provide a window into the potential objectives of financial services policy under the Trump Administration, including, most notably, the transition team’s statement shortly after the election that the President-elect’s “Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

While we await additional details on the President-elect’s financial services policy agenda, we believe a possible blueprint for financial regulatory reform may be found in several legislative proposals that Republican lawmakers in the House and Senate have advanced in the current Congress. Of particular note are two Republican bills—one introduced in the House and the other in the Senate, each authored by the Chairman of the relevant financial services committee and approved in committee by party-line vote—that would significantly scale back, and in some cases repeal, key elements of the post-crisis regulatory framework established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. This memorandum outlines key provisions of these Republican proposals and certain other 2016 legislative initiatives, elements of which may be embraced by the incoming Trump Administration.