Having spent billions of dollars on post-crisis U.S. financial industry reforms they once scorned, bankers are concerned the Trump administration, joined by a like-minded Congress, will scrap or significantly change the rules.
Big U.S. banks have collectively spent tens of billions of dollars and a legion of man-hours to adhere to a sweeping set of rules known as Dodd-Frank, which was enacted in 2010 following the financial crisis that triggered the Great Recession.
To comply, the industry hired tens of thousands of staffers, built new technology systems, hived off businesses, simplified corporate structures and doubled the amount of capital it holds.
JPMorgan Chase & Co has said that in its mortgage business alone, employees spent 800,000 hours in compliance training in a single year.
The industry went into these changes kicking and screaming. Banks lobbied hard against Dodd-Frank as it was being drafted, then cajoled regulators to go easy in defining and implementing precise rules. But now that the heavy lifting has been done and Dodd-Frank is largely in effect, the industry see a total elimination as more of a threat than a blessing.
Dodd-Frank has largely made banks safer and the once-opaque derivatives market more transparent, banking executives said.
President-elect Donald Trump, who takes office on Jan. 20, and some important lawmakers in the incoming Republican Congress have pledged to dismantle the law and put a new one in place.
It is not yet clear what the replacement would look like, but Texas Republican Jeb Hensarling, who chairs the House Financial Services Committee, has drafted a blueprint called The CHOICE Act.
The proposal has a mix of things the industry largely supports, such as abolishing the U.S. Consumer Financial Protection Bureau (CFPB), but it also has some ideas Wall Street vehemently opposes, like ramping up capital requirements to a level that would likely force big banks to split apart.
Proposed changes are also likely to run into stiff opposition from some congressional Democrats, particularly Senator Elizabeth Warren, architect of the CFPB.
Any big rollback in rulemaking could take several years to implement and introduce more costs, lawyers said.
"One of the dangers of dismantling regulation is that it will be costly and disruptive," said Mike Alix, a consultant at PwC who works with banks on regulatory matters. "By and large they've gotten themselves into shape and they're not looking to get out of shape."
Bank executives, lawyers and consultants who spoke to Reuters said they are hoping it's possible to roll back some elements of Dodd-Frank that they view as too onerous or misguided, without scrapping the entire law.