In the past, the USA has never closed any major cabinet-level Institutions, especially entities like the FDIC. Some analyses indicate that any such reform plans could lead to massive job cuts.
On December 12, according to media reports, the Trump team is considering reducing or even eliminating some bank regulatory agencies, such as the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve.
According to informed sources, Trump's advisors and officials from the newly established Department of Government Efficiency discussed matters related to the abolition of the FDIC with potential nominees to lead the bank regulatory agencies. Advisors also inquired whether deposit insurance could be incorporated into the Treasury Department.
However, any proposal to abolish the FDIC or other institutions needs Congressional approval. In the past, the USA has never closed any major cabinet-level agency, especially institutions like the FDIC.
For bank executives, they hold an optimistic view on the series of regulations that Trump is expected to implement, such as easing capital buffers, reducing regulatory oversight on consumer protection, and reviewing industry consolidation, but they show caution regarding reforms to deposit insurance. Analysts point out that deposit insurance is seen as the cornerstone of the bank system, and any move to weaken its effectiveness could cause market unease, especially during times of crisis, which might exacerbate customer panic.
In addition, informed sources said that Trump's advisory team discussed plans to merge or restructure major federal bank regulatory agencies, including the possibility of closing the FDIC or merging it with other institutions. This policy was included in the "2025 Project" drafted by the Heritage Foundation and former Trump officials, though Trump claims he is not involved with the project.
Trump's ally in the House Financial Services Committee, Republican Congressman Andy Barr, expressed support for plans to eliminate or completely change the Consumer Financial Protection Bureau (CFPB), stating a desire to move away from a one-size-fits-all regulatory policy. Former FDIC Chair Sheila Bair said:
"We can streamline financial regulation to some extent, but that is really difficult to achieve. Proposals to eliminate bank regulatory agencies are hard to gain support from Congress and the industry."
Additionally, the Trump team is considering having only one of the institutions continue to regulate Banks without merging the FDIC, OCC, and the Federal Reserve, while the other institutions would retain only non-regulatory staff plans. Furthermore, the consumer Education work of the CFPB may replace regulatory and supervisory tasks.
Analysis points out that any plan could lead to large-scale job cuts, especially in the case where the Trump plan revives an executive order that makes it easier to dismiss federal employees.
In fact, significant changes in Banks regulation are not common except during financial crises. Most current banking rules were implemented after the Great Depression or the 2008-2009 financial crisis, when bipartisan groups and public opinion called for stronger Bank protections. It is noteworthy that the Republican Party will have a slight majority in both the Senate and House next year, but it is unlikely to gain support from the Democrats for these major reforms.
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