The Trump administration has made deregulation a central focus of its economic policy, aiming to shift financial power back into the private sector. UBS Equity Research analyst Erika Najarian recently attended a keynote lunch presentation with Treasury Secretary Scott Bessent, where it became clear that easing regulatory burdens on banks is at the top of the administration’s agenda. This shift is expected to significantly benefit financial institutions, particularly Capital One and Wells Fargo, according to Najarian.

The Push for Deregulation

A key theme emerging from the discussion was to “deleverage the public sector and re-leverage the private sector.” Treasury Secretary Bessent argued that many regulated entities are weighed down by an inefficient and overly restrictive supervisory system.

One of the major points raised was the declining role of bank balance sheets in corporate financing. Prior to the 2008 financial crisis, banks accounted for approximately 35% of corporate funding across companies of all sizes. That figure has since dwindled to just 17%, a shift that Bessent attributes to excessive regulation.

A significant move in the deregulation effort includes relaxing the Supplementary Leverage Ratio (SLR), which governs how much capital banks must hold against their assets. Notably, this change does not require congressional approval, making it a more immediate and impactful policy adjustment. Bessent specifically highlighted the impact of SLR in relation to U.S. Treasurys, signaling potential regulatory relief for financial institutions holding government debt.

Commitment to Tariffs

Beyond deregulation, the administration remains steadfast in its use of tariffs to address what it perceives as trade misalignments. While intended to strengthen domestic economic competitiveness, this policy has introduced volatility into financial markets, affecting economic confidence and banking sector stocks.

Urgency to Extend Tax Cuts

Another key takeaway from the discussion was the administration’s push to extend and make permanent the 2017 Tax Cuts and Jobs Act (TCJA). There is a growing sense of urgency behind this initiative, exceeding the sentiment expressed by former House Speaker Paul Ryan during a February fireside chat at the UBS Key Biscayne conference. Ryan, an architect of the TCJA, had previously discussed potential extensions, but the latest remarks suggest a more immediate focus on solidifying the tax cuts.

Implications for Financial Markets

For investors and financial institutions, these developments indicate a clear trajectory toward reduced regulatory constraints and a more business-friendly tax environment. While the full impact of tariff policies remains uncertain, the administration’s prioritization of deregulation and tax reform is poised to shape the financial landscape in the coming years.

As policymakers continue to refine these strategies, banks and businesses alike should prepare for a shifting regulatory environment—one that could open new opportunities for growth and investment.