Wall Street banks on Tuesday cheered U.S. President Donald Trump's plans to loosen the leash put on them in the wake of the 2008 financial crisis but they do not expect significant change any time soon.
The Trump administration has said the bulk of its plan for overhauling bank regulation can be done via executive order and through regulators, rather than requiring legislation from Congress. But Trump is months away from installing top officials at key regulatory posts to carry out his agenda.
"We won't see policy changes before the end of the year," said Rich Foster, senior counsel for regulatory and legal affairs at the Financial Services Roundtable, a trade group.
Trump has gradually been nominating heads of financial agencies, but only Treasury Secretary Steven Mnuchin and Securities and Exchange Commission (SEC) Chairman Jay Clayton have been approved by Congress. Other agencies are either awaiting presidential picks or are operating under "acting" chiefs. Others have leaders appointed by Trump's Democratic predecessor, President Barack Obama.
The Federal Reserve has already signaled it will make its stress testing of banks more transparent and is considering other steps to simplify the process, in line with Treasury's recommendations.
But the Treasury called for even more significant changes, including having the Fed overhaul its testing models and assumptions. Such changes may have to wait until the administration has appointed a vice chair in charge of banking oversight at the Fed.
Randal Quarles, a veteran of the George W. Bush administration, is expected to be Trump's pick for the Fed's top bank regulator, people familiar with the matter have told Reuters. He has not been named publicly while he is being vetted by the Federal Bureau of Investigation and the Office of Government Ethics.
Once he is named, he will have to be confirmed by the Senate -- a process that could easily slide into the fall with Congress facing a busy calendar and an upcoming five-week congressional recess from the end of July to the beginning of September.
Analysis by the Bipartisan Policy Center, a Washington think tank, has found that since 1989, it has taken an average of 149 days for a financial regulatory nominee to receive Senate confirmation after being announced.
Quarles has declined to comment on speculation about the possible nomination.