- Donald Trump could introduce sweeping changes to Wall Street when he takes office on January 20.
- His policies are expected to boost core investment-banking businesses, like M&A and lending.
- He may also spur competition from financial technology startups and roll back consumer protections.
Donald Trump is already signaling his plans for Wall Street through his appointments to federal agencies like the Federal Trade Commission, which aims to promote commerce and protect consumers. He wants to replace Lina Khan, the agency’s commissioner, with Andrew Ferguson, who is expected to be less aggressive in blocking large mergers.
Advertisement
The London Stock Exchange Group predicted that mergers-and-acquisitions volume would reach more than $3 trillion globally in 2024. While that’s up slightly from last year, it’s consistent with the malaise that has gripped Wall Street amid the high interest rates and dealmaking slowdown of the post-COVID years.
But with Trump returning to office on January 20, investment bankers and private-equity financiers are gearing up for what could be a friendlier dealmaking environment. In a postelection interview with CNBC, Jeffrey Solomon, the president of the financial firm TD Cowen, predicted that the “regulatory environment will be much more conducive to economic growth.”
Advertisement
“There will be lighter and targeted regulation,” he said, expressing a view that many in the finance industry share.
With Trump’s historically less hawkish approach to regulation and pronouncements to spur economic activity and tame inflation, here are five ways his policies could shape Wall Street in 2025 and in the years to come.
Bank lending
Trump is generally expected to reduce regulations for companies, including banks. One way he could do this is by rolling back the Biden administration’s plans to enforce stricter capital requirements on banks, nicknamed “Basel III Endgame.” Bank leaders, including JPMorgan Chase CEO Jamie Dimon, have vehemently opposed the proposed rules, saying they would require banks to hold on to far more capital than they needed to manage their risks. The law firm Davis Polk said Trump could ease the capital restrictions, which could free up banks to put more of their capital to work via lending or other activities.
Advertisement
M&A
M&A is once again showing signs of life, thanks to the Fed’s plans to lower the cost of borrowing.
A KPMG survey of 300 corporate and private-equity dealmakers released in December revealed a bullish outlook among those poised to engage in M&A transactions in the year ahead. In the online survey, 85% of respondents said they were eyeing more deals now than six months ago, and 79% said that the outcome of the presidential election would produce “an easier regulatory or anti-trust environment for M&A.”
Trump is expected to turbocharge the dealmaking environment by replacing the current head of the Federal Trade Commission, Lina Khan, who has been aggressive in blocking big mergers, including a $24.6 billion tie-up of the supermarket chains Kroger and Albertsons. Khan has also taken steps to break up tech giants Amazon and Meta.
Advertisement
Trump has selected Andrew Ferguson, one of the FTC’s current commissioners, to replace Khan as the FTC’s chair. Ferguson is expected to be more welcoming of large mergers, although he has vowed to crack down on Silicon Valley tech giants, especially those that he says stifle conservative voices. In a post on X, he said: “At the FTC, we will end Big Tech’s vendetta against competition and free speech. We will make sure that America is the world’s technological leader and the best place for innovators to bring new ideas to life.”
Crypto and fintech
Trump embraced crypto on the campaign trail, becoming the first presidential candidate to accept campaign donations in cryptocurrency. He named the venture capitalist David Sacks as his “AI and crypto czar.” Sacks’ job would be to find ways to help crypto thrive, including by advising the White House on “a legal framework so the crypto industry has the clarity it has been asking for,” Trump said on his social-media platform Truth Social.
Trump’s focus on crypto and AI has financial-industry watchers betting that a second Trump administration would be a boon to fintechs, which could prove a mixed bag for established banks that have adopted new banking technologies to compete with the rise of payment and banking apps.
Advertisement
Davis Polk lawyers said in a December 19 report: “The focus on growth and innovation is likely to be centered around facilitating safe and sound fintech activities, making the path to achieving a bank charter for innovative firms more readily achievable and drawing clearer rules of the road for banking organizations to participate in a variety of crypto-asset-related and tokenization activities.”
Consumer banking
Trump is expected to reduce regulations generally, including consumer protection efforts that have drawn opposition from Republican lawmakers. On December 12, the Biden administration finalized rules limiting what banks can charge consumers on overdraft fees. In response, banking groups filed a lawsuit, and Sen. Tim Scott of South Carolina, the incoming chairman of the Senate Banking Committee, denounced the head of the Consumer Financial Protection Agency, Rohit Chopra.
Some Trump supporters have called for sweeping changes to the CFPB, an Obama-era agency responsible for protecting consumers from unfair treatment by financial firms.
Advertisement
“Delete CFPB,” Elon Musk wrote in November on X, his social media platform.
IPOs
The stock market reacted enthusiastically to Trump’s election, sending stocks to record levels until December when investors started harvesting gains. Stock-market optimism stands to boost IPO activity, which thawed slightly in 2024 following several years of stagnation.
There were 214 IPOs filed this year, up 19% from 2023, the IPO tracker Renaissance Capital said.
Advertisement
Whether the stock-market cheer continues, however, will depend on Trump’s policies once he takes office. The president-elect is largely expected to take a pro-business stance, but he has also proposed taxing foreign imports at levels that threaten to slow the economy by raising the prices of consumer goods.
While tariffs don’t automatically lead to rising prices, “adding tariffs at the scale being discussed would have inflation implications,” said Rob Haworth, a senior investment strategy director with US Bank Asset Management in a recent research report. Trump has proposed levying a 10% tariff on goods imported from China and a 25% tariff on goods from neighbors Mexico and Canada.