What's going on?

On Friday, President Trump promised to undo a number of regulations that were placed on financial companies in the wake of the 2008 financial crisis (tweet this) � and bank stocks, once again, jumped higher.

What does this mean?

The theory is that there are too many regulations on banks, and that by loosening things up, banks will be better able to support the overall economy (e.g. by lending more companies money). One counter-argument, of course, is that the regulations were put in place for a reason (e.g. the 2008 crisis, which originated on Wall Street, did a huge amount of damage to the �real� economy). Friday�s moves were simply presidential directives. To roll back the regulations, Trump will need Congress to act � and the extent to which Congress will support the rollback isn�t clear.

Why should I care?

For you personally: A new rule aimed at protecting individual investors might not be implemented.

One rule that was about to be implemented by an Obama presidential decree is a requirement that financial brokers act in their clients� best interests (at the moment, a certain type of broker is only required to ensure that a financial product is �suitable� rather than it being in the best interests of their client). Trump has said that rule will be reviewed, and his administration may decide not to implement it � which would be good for brokerage companies but, perhaps, not so good for individual investors.


For the markets: Bank stocks had a great day.

Overall, US banks were up, on average, about 2%. Since Trump�s election, most bank stocks are up more than 20% on hopes that the new government will peel back rules limiting their business practices and because of higher interest rates (which allow banks to charge their clients more for the loans they take out). The extent to which Congress actually peels back the regulations will be an important determinant of bank stocks� performance going forward.