President-elect Donald Trump has pledged to undo regulations affecting the financial services industry, but rolling back such rules could prove difficult, a top banking executive said at an industry event in Ballantyne Wednesday.
In a keynote address during a financial services summit at Ballantyne Hotel & Lodge, Ally Financial public policy head Michele Lieber said the “narrow” 52-to-48 majority Republicans hold in the Senate might create challenges in passing legislation to loosen some banking regulations.
“Republican leaders will need to find eight Democrats willing to break (from) their party in order to advance controversial legislation in the Senate,” Lieber said. “That is a tall order in this environment.”
Lieber delivered the remarks to about 200 industry officials, including employees of Bank of America and Wells Fargo, gathered for the event organized by the Charlotte Chamber. Other speakers earlier in the day discussed topics ranging from new banking technologies to financial sector hiring trends.
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Ally Financial is based in Detroit but Charlotte is home to CEO Jeff Brown and a significant employee hub. Lieber, who lives in Washington, D.C., said the sector could face opportunities but also “unanticipated challenges” under Trump and the Republican-controlled Congress.
Trump has vowed to dismantle 2010’s Dodd-Frank financial overhaul law, which the Republican has said hurts borrowers’ ability to get business loans. But Lieber said lawmakers’ decisions to reduce financial sector regulations could be influenced by banks’ post-financial crisis “image problem” with the public.
“Elected officials are extremely attuned to voters’ opinions and careful to avoid taking positions that could be perceived as not in the best interest of their constituents back home,” she said.
Some corners of the industry could actually see additional regulations, Lieber said.
Financial technology, or “fintech,” companies, like those offering payment apps for smartphones, will be the focus of “considerable debate” in 2017 about how the growing sector should be properly regulated, she said.
Lawmakers and regulators will come under increased pressure to ensure consumers are not taken advantage of as they increasingly rely on the new financial products, Lieber said.
One target of criticism by many Republican lawmakers has been the Consumer Financial Protection Bureau, a watchdog agency created by Dodd-Frank.
Lieber said the bureau could see “significant changes” in how it operates and is organized. For example, some lawmakers are seeking for the bureau to be run by a multimember bipartisan commission, instead of by a single director under the current structure.
Lieber said she expects Massachusetts Sen. Elizabeth Warren and other progressive Democrats to fight “tooth and nail” attempts to change the CFPB, which she describe as “generally popular among voters.”
Given the power Republicans will hold in Washington, the Trump administration could spur increased activity at the state level by consumer advocates advancing agendas affecting the financial services sector, Lieber said.
Those groups are likely to find receptive audiences in Democratic-leaning states, where “officials are already positioning themselves as the resistance against what they fear will be the Trump administration’s overreach on a host of issues,” she said.