Trump Victory Changes Financial Services Leaders, Priorities

Donald Trump's victory in the Nov. 8 presidential election is ushering in sweeping change across the financial services spectrum, including new heads of regulatory agencies in Washington and new lawmakers to oversee those bodies, as the economic and market implications of a President Trump are still playing out.

Not long after being elected, Trump began assembling his transition team, which includes former SEC Commissioner Paul Atkins, a conservative Republican known for his deregulatory vein, to counsel him on financial appointments, as well as Anthony Scaramucci, a Trump advisor who's founder and a co-managing partner of investment firm SkyBridge Capital and a co-anchor of the Fox Business show "Wall Street Week."

Trump will also be dealing with a GOP-controlled Congress. Rep. Jeb Hensarling, R-Texas, will continue to head the House Financial Services Committee, while Sen. Mike Crapo, R-Idaho, is the odds-on favorite to replace Sen. Richard Shelby, R-Ala., as head of the Senate Banking Committee. Both of these committees oversee the SEC.

SEC Chairwoman Mary Jo White announced in mid-November that she would leave her post in January. Talk swirling around Washington is that a number of candidates are being considered to replace her — including Atkins, as well as his colleague at Patomak Global Partners and former SEC Commissioner Dan Gallagher. Mercatus Fellow Hester Peirce, who's been awaiting her confirmation as a new SEC commissioner, is also said to be a potential candidate for SEC chair. She has close ties to Atkins, having served as his counsel while he was an SEC commissioner.

Other names that came up as potential SEC chairs include current Commissioner Michael Piwowar as well as former Commissioner Troy Paredes, who now heads Paredes Strategies in New York.

Trump named J. Steven Hart, a longtime Washington lobbyist who focuses on tax and employee benefits, as the leader of his labor transition team. As reported by IA sister publication Corporate Counsel, Hart is chairman of the law and lobbying firm Williams & Jensen and has also worked at the Labor Department on benefits and retirement issues.

The Fate of DOL, SEC Fiduciary Rules

One of the biggest issues being watched after Trump's election is what — if anything — happens to the Department of Labor's fiduciary rule on retirement accounts. Advisors, lawyers, lobbyists and industry watchers are predicting everything from repeal of the rule before its April 2017 compliance date to parts of the rule being gutted.

Some say Trump will appoint a new Labor Secretary who will be willing to scrap the existing DOL rule and issue a new "interim rule," while still others believe Trump will not make DOL's rule a priority action item during his first 100 days after taking the oath of office on Jan. 20, 2017, allowing the rule to kick in.

During her final appearance before the House Financial Services Committee on Nov. 15, SEC Chairwoman White dashed any hopes that the agency might come through with its own fiduciary proposal before her departure in January.

"I don't think there's consensus to move that forward in the current commission," White told the lawmakers.

Scaramucci has "promised that Trump would repeal the [DOL] rule, effectively arguing that it is a fatally flawed rule that inappropriately discriminates against financial advisors," according to a report from Washington Analysis.

Rep. Ann Wagner, R-Mo., a staunch opponent of the DOL's fiduciary rule, told the Wall Street Journal Nov. 14 that she and Republican lawmakers would "renew their fight" after Trump's inauguration to "dismantle or delay" Labor's fiduciary rule.

Wagner highlighted during a House Financial Services Committee hearing in late November the recent decision by Merrill Lynch, for instance, to stop offering mutual funds in IRAs.

"Already choices are being taken away from customers," Wagner said to White, who was testifying before the committee at the late November hearing. "Are you concerned at all, ma'am, by the impacts on the retirement services markets that the SEC oversees and regulates?"

White responded, "I think we're all concerned about anything that results in depriving retail investors of reasonably priced, reliable advice," adding that the agency continues to monitor any such impact "in terms of our own thinking about a fiduciary duty rule. Markets do adjust to rules in ways that sometimes have effects that are not desirable."

White noted the ongoing dialogue the SEC is having with Labor about "where we overlap" in terms of jurisdiction. "Our job is to coordinate the best that we can, provide relief if we have the authority to and it makes sense to minimize impacts."

Wagner asked White if the SEC was considering the business impacts of DOL's rule. "Certainly that data will be considered," White said.

Wagner asked White if the agency had performed an analysis of how RIAs would be impacted by a fiduciary rule. White responded: "That is part of the analysis that's done continuously. But before we would move to a rule, it would be definitively studied."

Repealing Dodd-Frank?

Rep. Hensarling said in late September that his Financial CHOICE Act that seeks to replace Dodd-Frank and kill DOL's fiduciary rule will likely move to the House floor for a vote after the election, and that Trump supports the legislation.

"In my conversations with Mr. Trump, he and I share the view that Dodd-Frank has not led to economic growth in America, and we agree on" the CHOICE Act, Hensarling said in late September. Hensarling was overwhelmingly reelected to his House seat.

The Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act (CHOICE) incorporates into the bill Rep. Wagner's Retail Investor Protection Act, H.R. 1090, which passed the House last year and requires the SEC to move first on a fiduciary rulemaking. Wagner also handily retained her House seat.

— Read SEC's White: No SEC Fiduciary Rule Coming Before January on ThinkAdvisor.