A New Era of Deregulation on the Horizon
Wall Street executives are eagerly anticipating a business-friendly regulatory environment with Donald Trump’s return to power. A softer stance on antitrust and less regulation in areas such as banking and cryptocurrencies could boost corporate profits and spur deal flow.
Pro-Business Agenda
Industry insiders expect a significant easing of regulatory pressures, with smaller government, broad deregulation, and tax breaks for corporations and the wealthy. “He is pro-business and anti-regulation,” said Euan Rellie, co-founder and managing partner of investment bank BDA Partners. “His instincts are to cut taxes. All of that will help the M&A market.”
Mergers and Acquisitions on the Rise
A more lenient approach to antitrust issues could lead to a surge in dealmaking across various sectors. The media industry, in particular, is expected to undergo significant consolidation over the next two years. The banking industry may also see more mergers, with some experts predicting a reduction in the number of banks from 4,700 to around 2,500.
Financial Deals Get a Boost
Large financial deals, such as the $35.3 billion merger between Capital One and Discover Financial Services, are more likely to be approved under the new administration. Shares of payments firms surged on the news, reflecting the increased optimism in the market.
Banks Breathe a Sigh of Relief
The banking industry is expected to benefit from a more relaxed regulatory environment, with the turnover of regulators stalling the bank regulatory super cycle that has existed over the last couple of years. This paints a very favorable picture for banks, with less stringent capital standards and reduced regulatory pressures.
Not Everyone is Celebrating
However, not everyone is optimistic about the new administration’s policies. Renewable energy companies are worried about the continuation of tax credits and incentives under Biden’s push for green energy. Some are also concerned about the potential risks of deficits rising under a Trump administration, with estimates suggesting his policies could add $7.5 trillion to deficits over 10 years.
Personal Concerns
Other concerns are more personal, such as safeguarding non-U.S. staff. Trump’s previous tightening of access to some visa programs has raised concerns among international employees on H-1B visas, who are worried about renewing their visas and how their employers can support them.
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