Advisers to President-elect Donald Trump have been openly raising the possibility of the incoming administration dissolving the Federal Deposit Insurance Corp amid indications that a dramatic deregulation of the finance system is in the offing, according to a report.
The Trump transition team has been busy examining ways to consolidate, shrink or even outright eliminate banking regulators in Washington, DC, as part of an overhaul, according to the Wall Street Journal.
Trump aides who have interviewed potential nominees to key posts in the FDIC as well as Office of the Comptroller of the Currency have wondered aloud whether deposit insurance could be placed under the purview of the Treasury Department, the Journal reported.
Earlier this year, a law firm released a damning report detailing alleged instances of widespread sexual harassment and other misconduct at the FDIC. The report was commissioned in response to revelations cited by the Journal of allegations the agency was a toxic workplace.
Martin Gruenberg, the FDIC chair, has said he would step down next month.
Eliminating the FDIC, which was created during the Great Depression nearly 100 years ago, would require authorization from Congress.
The agency, which operates independently, insures deposits up to $250,000 per depositor.
Public confidence in the banking system was shaken in the last two years following the collapse of Silicon Valley Bank, Signature Bank of New York and First Republic Bank.
The OCC, which was established during the Civil War, is an independent bureau within the Treasury Department which is another regulatory body in charge of overseeing the banking sector.
While Wall Street has cheered the prospect of deregulating the banking system, a move that could create the perception that the government was weakening deposit insurance could potentially be fraught.
Sheila Bair, who chaired the FDIC during the George W. Bush administration, told the Journal she didn’t think lawmakers or the banking industry would get behind abolishing or even downsizing the FDIC.
“Banks may complain, but at the end of the day, they like to have their own regulator they have a relationship with,” Bair said.
“They like the status quo.”
Bair conceded that “we could use some streamlining on financial regulation,” though she added that “it is really hard to get done.”
The Post has sought comment from the Trump transition team.
Trump has relied on the advice of Tesla CEO Elon Musk and former GOP presidential candidate Vivek Ramaswamy — both of whom are co-chair of an advisory body known as the Department of Government Efficiency (DOGE).
Treasury Secretary-designate Scott Bessent and DOGE officials have been interviewing potential bank regulators, according to the Journal.
Last month, Musk publicly called for the elimination of the Consumer Financial Protection Bureau, the brainchild of Sen. Elizabeth Warren (D-Mass.) which was created in the wake of the 2008 financial meltdown.
Sources close to the situation told the Journal that among the ideas raised during the discussions are combining the FDIC, the OCC and the Federal Reserve.
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