Why Big Banks Are Betting on Trump’s Presidency to Skyrocket Profits and Slash Regulations

When JPMorgan Chase reported a strong quarter in July 2023, CEO Jamie Dimon wasn’t focusing on their success. Instead, he was talking about the competition. “They’re dancing in the streets,” Dimon said, referring to hedge funds and private equity firms taking over the lending business while banks like his had to follow tough rules. But when Donald Trump won the 2024 election, Dimon and many others in the financial world suddenly had reason to celebrate. “A lot of bankers, they’re, like, dancing in the street,” Dimon said after Trump’s win, hoping that he’ll ease up on the rules.

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Wall Street’s Frustration with Ongoing Regulations

For the past few years, banks have felt weighed down by increasing regulations. From stricter capital requirements to new rules on lending, Wall Street execs had grown tired of constantly changing rules. Sandy Warner, who used to run JPMorgan, summed up how many bankers feel: “Whenever we turn around, there’s a new rule, or new requirements that just make things harder.” But despite all these extra rules, big banks have made a lot of money.

Back in 2007, just before the financial crisis hit, JPMorgan made huge profits. Since then, they’ve broken that record time and time again. Even with Joe Biden in office, the bank has seen record profits. If things continue as expected, 2024 could be JPMorgan’s best year ever.

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Banks Hope for Trump’s Regulatory Reforms

So why are bankers so excited about Trump’s return? It’s not just about profits; it’s about the possibility of easing regulations that have been constraining growth. When Trump was president before, he promised to reduce financial regulations—and bankers are hoping he’ll deliver on that promise again.

Citigroup CEO Jane Fraser even said she expects relaxed rules on banking regulations, adding that she believes the government will ease some of the tougher rules. This could help banks do more business and make even more money.

Mergers and Acquisitions Could See a Boost

Another area where banks expect big things is mergers and acquisitions (M&A)—or the buying and selling of companies. Under Biden, companies were slow to merge because the government was keeping a closer eye on big deals. But with Trump back in charge, bankers think the government will be more open to approving mergers. This could bring in a lot of money for banks, which make a lot of their earnings from helping companies buy or sell businesses.

Potential Challenges for Trump and the Economy

Even though Trump’s return is bringing optimism to banks, there are some risks. His policies—like imposing tariffs on other countries or limiting immigration—could raise inflation and put pressure on the economy. Some economists warn that these moves might eventually lead to higher interest rates, which could affect banks' profits.

Trump has also been known to challenge the Federal Reserve and has supported the cryptocurrency industry, which isn’t always popular with traditional banks. While this could cause some tension, most bankers are still hopeful that Trump will focus on making business easier, especially for the banks.

What Banks Expect

For now, Wall Street is betting on Trump to ease the regulations that have been holding them back. Banks are hopeful that with fewer rules and more opportunities for mergers, they’ll continue to make big profits. Even though there are risks, many believe Trump’s return to the White House will help big banks thrive.

As Sandy Warner, the former JPMorgan CEO, put it, “I’m not a dancing-in-the-streets guy. I keep my hands in my pockets. I’m certainly smiling.” The future looks bright for big banks, and they’re ready to capitalize on the changes that Trump’s presidency might bring.

Trump’s presidency could boost profits for banks by cutting down on regulations and making it easier for companies to merge. Despite some risks, Wall Street is optimistic that the next few years will bring more growth and opportunities for banks. With Trump’s policies, big banks could see even more success and profitability.

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