Banking Industry Reacting to Deregulations and Administration Change

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Thanks to deregulation in the financial industry, the banks could soon enjoy much more freedom and earn even more financial security.

According to CNBC, after top Federal Reserve official Daniel Tarullo resigned from office, the banking industry collectively let out a big sigh of relief.

Tarullo was a strong advocate for regulation within the banking industry, and as Richard Bove, a top financial analyst for Rafferty Capital Markets, states, the resignation of Tarullo is a “big, big plus.”

“The elimination of Daniel Tarullo as a force within the Fed and American banking is a very positive step toward real deregulation in core banking,” said Bove. “It suggests that the banks will be able to operate more freely in the financial markets in obtaining funds and manufacturing products.”

The nation is still torn on whether or not to fully trust the banking industry, as less than half (47%) of people in the U.S. actually admit to trusting their bank. Despite the skepticism surrounding the newly deregulated banking industry, analyst Mike Mayo believes that the bank stocks could still increase another 50% over the next three years.

“In the past decade, banks have raised $700 billion of tangible equity, $1 trillion of cash and $3 trillion of core deposits,” Mayo added. “The U.S. banks are strong enough not to absorb just one financial crisis but two financial crises.”

Although the banks are projected to have more freedom and financial power than they’ve seen in recent years, this is both exciting to many U.S. citizens and terrifying to others. Another reason people’s trust in banking is virtually split down the middle is that many businesses across the country are doing poorly, causing financial instability within the market.

According to The Mercury News, Silicon Valley, the once prominent tech hub of the U.S., is experiencing major decreases in job growth.

Across the nine counties in the Bay Area, the technology industry’s annual job growth decreased to 3.5%, resulting in only 26,700 new jobs in 2016. That is compared to the more than 6% increase in both 2014 and 2015.

Tech companies in the area are also expected to cut roughly 2,000 additional jobs during the first few months of 2017.

Although some industries are suffering, causing many investors to worry, other markets, like the real estate industry, transportation industry, and the beauty industry, which is reporting a 28.5% increase in the number of U.S. salons offering hair extensions over the last two years, are flourishing.

The market will have to wait and see how these deregulations and the new administration will actually impact both the public and the private sector, but the banking industry is certainly excited.

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