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Donald TrumpThe transition team reportedly sought ways to reduce or eliminate banking oversight — a move that could have dramatic consequences for everyday Americans and the protection of their money.
In interviews with candidates for supervision of the banking sector, Trump’s advisers and DOGE – advisory department for government efficiency – officials asked if the president-elect could abolish the Federal Deposit Insurance Corporation, he said The Wall Street Journal.
Trump’s team also asked whether the FDIC could be absorbed into the Treasury Department.
Any move to eliminate the FDIC would require congressional approval. But, if it were to happen, it would be a major shakeup in the industry.
The FDIC was created during the Great Depression. It is designed to help strengthen faith in the nation’s banking system. Most people know the agency because it insures bank deposits up to $250,000.
So if there was a run on a bank or one were to collapse, people with up to $250,000 would not lose their money because it was insured by the federal government.
If the FDIC disappears, ordinary people could lose that insurance or guarantees that their money will still be available in the event of a bankruptcy or collapse.
The WSJ the report states that banks hope Trump will loosen regulationsFDIC insurance is considered “almost sacred.” A move to eliminate that deposit insurance could cause panic among customers – and cause people to seek their money out of danger.
Last year several banks failed and this led to customers moving money to the big banks and away from the smaller groups.
Sources said WSJ that Trump’s team, which includes DOGE advisers Elon Musk and Vivek Ramaswamy, also asked the candidates about combining or restructuring banking regulators, including the FDIC and the Federal Reserve.
But former FDIC Chairman Sheila Bair said any proposal to eliminate the banking regulator would be difficult to win support in Congress.
“Banks can complain, but at the end of the day, they like to have their own regulator that they have a relationship with,” Bair told WSJ. “They like the status quo.”
Major changes in banking regulations are uncommon outside of the financial crisis, he says WSJ. Most of today’s banking rules came about after The Great Recession and the Great Depression.
Democrats led the last major effort to shut down the banking regulator by having Congress dismantle the Office of Thrift Supervision – which oversaw lenders before the 2008 housing crisis – and turn the agency into the Office of the Comptroller of the Currency.