As the election season winds down, Vice President Kamala Harris and former President Donald Trump have kept their preferences for financial services regulatory staff close to their vests.
But regardless of who enters the Oval Office in 2025, WealthManagement.com interviews with some experts in the space suggest that the US could see a slowdown in the pace of regulation (and likely a showdown at some point, if Trump emerges victorious).
After all, the tone and pace of each candidate's agenda for financial services regulation (and who they appoint to implement it) also depends heavily on the makeup of the US Senate in January.
A Harris Presidency could change Biden's approach
While Harris is “philosophically in tune” with the Biden administration, financial regulation may not be as central to a Harris administration as it has been during Biden's tenure, according to Mark Quinn, director of regulatory affairs at Cetera Financial Group.
Given the pace of regulation affecting the space (including the Best Interest Rule and the Labor Department's fiduciary rule), a new Democratic administration may not feel the need to hit the gas too hard.
“A lot has happened in the last five years, and I think one could effectively argue that the big issues have been addressed,” Quinn said. “We have to let this settle for a while now.”
Much of Harris's personnel decisions will depend on the partisan makeup of the US Senate. Polls suggest the GOP will hold a narrow margin in the body responsible for confirming the prime minister's administration personnel. This will be unusual for Harris, as presidents starting their terms typically benefit from a Senate led by their own party.
Even in a 53-47 Republican Senate, it may be possible to get the nominees approved, according to Jeff Bush, director of The Washington Update and a policy and policy consultant to financial services firms. However, he said Harris would have to be open to appointing someone without as much “vehemence” in pursuing a regulatory environment to protect consumers.
But if Harris faces a Senate unwilling to consider any options, Bush speculated that she might rely on acting instead of permanent posts, as both Trump and Biden felt compelled to do.
“Donald Trump really pushed the boundaries of what a sitting agency head can do, and I wouldn't foresee Kamala Harris taking a more conservative approach,” Bush said. “She would probably match, if not, push it a little further if she really feels stymied by a Republican majority.”
According to Quinn, if Harris is elected, “it wouldn't be a bad bet” to assume Gary Gensler stays in the SEC, at least to start. However, SEC chairmen tend to change even among incumbent administrations that win a second term; Going back to Ronald Reagan, it's rare to find an SEC commissioner who lasts more than four years.
“It's a long shot to say, even if Harris is elected, it wouldn't surprise me to see Gensler gone within six to 12 months of when she's inaugurated,” Quinn said.
A Trump victory could bring unrest
According to Quinn, Donald Trump will lead a “complete overhaul” of regulatory agencies.
Unlike Harris, if Trump is elected, he is more likely to nominate individuals before a GOP Senate. Quinn speculated that for SEC chairman, Trump was more likely to appoint someone from outside the agency rather than select Republican commissioners Hester Peirce or Mark Uyeda, since presidents tend to want someone they are familiar with in the first place.
Quinn also expected the DOL's fiduciary rule to be under question from the administration, although Trump could not immediately revoke it without an administrative process.
However, The DOL is currently involved in litigation challenging the fiduciary rule in Texas court. If Trump is elected and the Fifth Circuit Court of Appeals rules against the Labor Department (as it did with the Obama administration's rollback of the rule), the Justice Department may decide not to appeal the decision further, leaving it dead.
Quinn expected a second Trump administration approach to financial regulation to largely mirror his first term, saying, “He is who he is.” However, he noted that it was under Trump (and then-SEC Chairman Jay Clayton). the commission approved the Best Interest Regulation in 2019.
“A lot of progressives think it didn't go far enough, but I think you have to agree that it represented a pretty fundamental change in the standards applicable to our business,” he said.
A potential Trump administration could also spur action at the state level, according to Quinn.
During Trump's last term, many state regulators believed that his administration was not “sufficiently protective” of investor interests during his administration. Some states and organizations considered options that would have made state standards more stringent than federal ones (examples include the Massachusetts fiduciary rule and the model rule proposed by the National Administration of State Securities Advisers).
While the Biden administration faced lawsuits and regulatory pushback from red states, Quinn said those attacks were less focused on financial regulation than the Trump years.
“We have to have standard policies and procedures that apply to everybody, and if suddenly a state or several states adopt standards that are different from the federal standards, that kind of becomes the de facto national standard,” he said. “And my view is that if Trump wins, you might see more of that activity from blue states.”