Trump Takes Aim at Banking Rules: Deregulation, Digital Assets & Consumer Safeguards Under Pressure

 By [HPT NEWS]

Published: July 6, 2025

Washington, D.C. — Six months into his second term, President Donald J. Trump has taken a sledgehammer to the post-crisis banking reforms that defined much of the last decade. With sweeping regulatory rollbacks, a near-paralysis of the Consumer Financial Protection Bureau (CFPB), and a deregulatory blitz in digital finance, the Trump administration is aggressively remaking the U.S. financial system in its image.

For some in the financial world, it’s a long-overdue liberation. For others, it’s a dangerous gamble—one that may leave working Americans more exposed to risk than ever before.

This isn’t just about bank policy. It’s about who holds power in America—and who bears the cost when that power goes unchecked.

A New Era: Deregulation at Full Speed

When Trump took office again in January 2025, many expected a rollback of Biden-era regulations. Few anticipated the speed and scope with which he would dismantle key financial protections.

By spring, Trump had signed off on a dramatic reworking of bank capital requirements, particularly the Supplementary Leverage Ratio (SLR), which determines how much capital banks must hold against their assets—including U.S. Treasurys. Large banks had long argued that the rule was burdensome, especially during times of high government borrowing. The administration listened.

With new guidance from the Federal Reserve and Treasury Secretary, the SLR was loosened. The result? Banks are now holding less capital against risk-free government bonds, freeing them to lend and invest more freely—while also giving the federal government a break on its soaring debt interest payments.

But critics, including some within the Fed, warn that these changes leave the system more vulnerable in the next financial crisis. “We’re trading resilience for convenience,” one senior economist at the FDIC said privately.

The Disassembling of the CFPB

Perhaps no agency has felt the shock of Trump’s return more directly than the Consumer Financial Protection Bureau.

Created after the 2008 financial crisis to safeguard consumers from predatory lenders and hidden fees, the CFPB has been one of the most controversial institutions in Washington. Under Biden, it pursued aggressive enforcement of payday loan regulations, proposed a $5 cap on overdraft fees, and forced transparency from fintech companies.

Under Trump? It has been brought to a near standstill.

The new acting director, installed by Trump, slashed staff, froze enforcement, and shuttered field offices. The rule capping overdraft fees—widely supported by consumer groups—was halted indefinitely. Most stunningly, the agency was forced to vacate its Washington headquarters after a court ruling questioned the legality of its funding mechanism.

Behind closed doors, administration officials have debated whether the CFPB should be eliminated altogether, its functions merged with the Federal Reserve or another bank-friendly institution. Critics say the move is ideological—an attempt to hobble one of the only agencies explicitly focused on working-class financial protections.

Supporters argue that the CFPB had grown too aggressive and too partisan in its rulemaking. “This is about reining in a rogue agency,” said one Trump adviser. But consumer advocates warn that Americans are now far more vulnerable to surprise fees, deceptive lending, and credit abuse than they were just a year ago.

The Banking Boom (for Some)

With regulation pared back and oversight relaxed, banking and financial services have entered a golden era—for the industry.

Community banks and mid-sized lenders have begun a wave of mergers and acquisitions, spurred by Trump’s repeal of Obama- and Biden-era scrutiny on bank consolidation. Treasury and the Office of the Comptroller of the Currency (OCC) are now fast-tracking approval processes, arguing that bigger, better-capitalized banks serve customers more efficiently.

On Wall Street, the mood is buoyant. The S&P Financials index has soared. Bank CEOs, once reluctant to wade into politics, have grown bolder, praising Trump’s policies on conference calls and earnings reports. Fintech firms, once wary of regulatory clamps, are back in expansion mode.

But not everyone is winning.

Low- and moderate-income consumers are starting to feel the squeeze. Without CFPB oversight, hidden fees and high-interest products are creeping back into mainstream banking. Payday lenders, long criticized for trapping people in cycles of debt, are again expanding across rural and urban America.

“I just got hit with a $75 overdraft fee for a $3 mistake,” said Karen Dawson, a single mother in Missouri. “That rule Biden had… it was supposed to stop this kind of thing. Now it’s gone.”

 Risk, Reimagined: The Treasury “Put”

Behind the regulatory changes lies a more strategic goal: managing the federal government’s debt burden.

With national debt surpassing 120% of GDP, the Trump administration is using banking policy to keep borrowing costs low. By loosening capital rules, especially around Treasury bond holdings, they are effectively engineering a “Treasury Put”—increasing demand for government bonds by making them more attractive to banks.

It’s a clever move—one that Wall Street analysts have praised for its ingenuity. But it’s also risky. If inflation returns, or confidence in U.S. creditworthiness erodes, banks could find themselves overexposed to government debt just when they need capital the most.

Some economists worry that the strategy is a short-term fix for a long-term structural problem. “You’re making it cheaper for banks to hold government IOUs,” said a former Fed official. “But if the music stops, who’s left holding the bag?”

 Digital Assets and Financial Innovation

Trump’s attitude toward cryptocurrencies and digital assets has shifted notably since his first term. While he once called Bitcoin a “scam,” he now embraces digital innovation—so long as it’s led by private industry.

In January, he signed Executive Order 14178, halting work on a government-issued central bank digital currency (CBDC) and instead launching a Presidential Task Force on Digital Assets. The order opened the door for banks to handle stablecoins, crypto custody, and even tokenized securities—provided they follow simplified regulatory guidelines.

Crypto executives welcomed the move as a sign that the U.S. was “back in the race” after losing ground to Europe and Asia. Skeptics, however, worry that without proper guardrails, the crypto space could once again become a haven for fraud and speculation.

“Trump’s crypto plan is basically: Let Wall Street handle it,” said one Democratic senator. “We’ve seen how that ends.”

The Political Equation

While these banking reforms are framed as economic policy, they are deeply political. Trump’s base includes small business owners, regional bankers, and conservative financial executives who have long felt boxed in by Washington red tape. For them, this is payback.

But it also comes at a time when economic inequality remains a burning issue. Critics say deregulating banks during a period of wage stagnation and inflationary pressure is a tone-deaf move that will only deepen the wealth divide.

As with many of Trump’s decisions, the question isn’t whether it works for the elite—it’s whether it works for everyday people.

Final Thoughts: The Cost of Freedom

President Trump’s second term is proving to be more transformative than his first. In the realm of banking, that transformation is clear: less regulation, more freedom, and a full embrace of market dynamics.

To many in the industry, it’s a breath of fresh air. But to millions of Americans who rely on basic financial protections to survive in an increasingly complex economy, it’s a warning sign.

The guardrails are coming off. Whether the road ahead leads to prosperity or peril may not be known until the next crisis hits.

But one thing is clear: In the new American banking system, freedom comes at a price—and it’s not always paid by those who profit most.