As the election season concludes, Vice President Kamala Harris and former President Donald Trump have kept their financial services regulatory personnel preferences close to their vests.
But no matter who enters the Oval Office in 2025, WealthManagement.com interviews with several experts in the space suggest that the U.S. could see a slowdown in the pace of regulation (and likely an about-face on some counts, should Trump emerge victorious).
Ultimately, the tone and speed of each candidate’s agenda for financial services regulation (and who they put in place to execute it) also heavily depends on the makeup of the U.S. Senate come January.
A Harris Presidency May Tweak Biden's Approach
While Harris is “philosophically in tune” with the Biden administration, financial regulation may not be as central to a Harris administration as it’s been during Biden’s tenure, according to Mark Quinn, the director of regulatory affairs at Cetera Financial Group.
Considering the pace of regulation affecting the space (including Regulation Best Interest and the Labor Department’s fiduciary rule), a new Democratic administration may not feel the need to hit the gas too hard.
“A lot has happened in the last five years, and I think one could really effectively argue that the big issues have been dealt with,” Quinn said. “We need to let this settle for a while now.”
Much of Harris’ personnel decisions will depend on the partisan makeup of the U.S. Senate. Polls suggest the GOP will hold a slim margin in the body responsible for confirming premier administration personnel. That will be unusual for Harris, as presidents starting their tenure typically benefit from a Senate led by their party.
Even in a 53-47 Republican Senate, it may be possible to get nominees approved, according to Jeff Bush, principal of The Washington Update and a consultant to financial services firms on politics and policy. However, he said Harris would need to be open to nominating someone without as much “vigor” in pursuing a consumer protectionary regulatory environment.
But if Harris encounters a Senate she deems unwilling to consider any options, Bush speculated she may rely on acting directors instead of permanent posts, as both Trump and Biden felt forced to do.
“Donald Trump really pushed the boundaries of what an acting agency head can do, and I wouldn’t anticipate that Kamala Harris would take a more conservative approach,” Bush said. “She would probably, if anything, match if not push that even a little bit further if she’s truly feeling stymied by a Republican majority.”
According to Quinn, if Harris is elected, “it wouldn’t be a bad bet” to assume that Gary Gensler stays at the SEC, at least to start. However, SEC chairs tend to change even among incumbent administrations winning a second term; going back to Ronald Reagan, it’s rare to find an SEC commissioner lasting longer than four years.
“It’s a long way of saying, even if Harris is elected, it wouldn’t surprise me to see Gensler leave within six to 12 months of the time she’s inaugurated,” Quinn said.
A Trump Win Could Bring Upheaval
According to Quinn, Donald Trump will lead a “complete reorganization” of the regulatory agencies.
Unlike Harris, if Trump is elected, he is likelier to nominate individuals before a GOP Senate. Quinn speculated that for SEC chair, Trump was more likely to nominate someone outside of the agency rather than opt for Republican commissioners Hester Peirce or Mark Uyeda, as presidents tend to want someone they are familiar with in the top spot.
Quinn also expected the DOL’s fiduciary rule to be in the administration’s crosshairs, although Trump could not immediately revoke it without an administrative process.
However, the DOL is currently entangled in litigation challenging the fiduciary rule in Texas court. If Trump is elected, and the Fifth Circuit Court of Appeals rules against the Labor Department (as it did with the Obama administration’s iteration of the rule), the Justice Department could opt not to appeal the ruling further, leaving it dead.
Quinn expected a second Trump administration’s approach to financial regulation to largely mirror his first term, saying, “He is who he is.” However, he noted that it was under Trump (and then-SEC Chair Jay Clayton) that the commission passed Regulation Best Interest in 2019.
“A lot of progressives think that it didn’t go far enough, but I think you have to admit that it represented a pretty substantial change in the standards applicable to our business,” he said.
A potential Trump administration could also galvanize action on the state level, according to Quinn.
During Trump’s last term, many state regulators believed his administration was not “sufficiently protective” of investors’ interests during his administration. Some states and organizations considered options that would have made state standards more stringent than federal ones (examples include Massachusetts’ fiduciary rule and the model rule put forward by the National Administration of State Securities Advisors).
While the Biden administration faced litigation and regulatory pushback from red states, Quinn said those attacks were less focused on financial regulation than the Trump years.
“We have to have standard policies and procedures that apply to everybody, and if suddenly one state or a couple of states adopt standards that are different from the federal standards, that kind of becomes the de facto national standard,” he said. “And my opinion is that if Trump wins, you could see some more of that activity from blue states.”
