President-elect Donald Trump’s transition team is reportedly considering sweeping structural changes to bank watchdogs, which have the potential to impact the mortgage market.
Analysts anticipated a shift toward a more lenient regulatory environment for the financial sector under the new Trump administration, but recent discussions suggest even more drastic measures are on the table. The transition team is exploring ways to shrink, consolidate or even eliminate top bank watchdogs, The Wall Street Journal reported after speaking to people familiar with the matter.
Advisers and officials of the yet-to-be created “Department of Government Efficiency” (DOGE) have asked potential nominees to lead the Federal Deposit Insurance Corp. (FDIC) about whether Trump could abolish the regulator and if bank deposit insurance could be absorbed into the Department of the Treasury. These questions were also posed to candidates for the Office of the Comptroller of the Currency (OCC).
This comes after a series of bank failures last year, which culminated in banks calling for wider deposit insurance protections.
Trump advisers have reportedly explored consolidating or restructuring the FDIC, the OCC and the Federal Reserve. An alternative proposal suggests designating one of these agencies to oversee bank regulation while limiting the others to nonregulatory functions.
These agencies play critical roles in the mortgage industry, influencing areas such as the guidance to address reconsideration of value (ROV) processes for residential real estate transactions, development of the new Community Reinvestment Act (CRA) rules and supervisory actions affecting the industry, among other things.
Implementing these proposals would require congressional approval, adding an additional layer of complexity and scrutiny to the discussions surrounding the regulatory shifts.
The news follows a call from Elon Musk — the world’s richest man and owner of companies such as Tesla, SpaceX and the social media platform X — to dismantle the Consumer Financial Protection Bureau (CFPB). Musk, along with former Republican presidential candidate Vivek Ramaswamy, have been appointed to lead DOGE.
This week, CFPB Director Rohit Chopra indicated he has no plans to resign but said he understands that Trump could fire him at will.
Regarding the CFPB, the Trump transition team is exploring the possibility that consumer education jobs could replace regulatory and supervisory jobs, according to The Wall Street Journal. Trump would make it easier to dismiss workers by reinstating the stricter Schedule F return-to-office policies.
