An interview with Doug Elliott and William “Bill” Coen: Basel Endgame and financial regulation in the Trump 2.0 Era
In a candid and thought-provoking interview, we sat down with Doug Elliott, Partner at Oliver Wyman, and William “Bill” Coen, former Secretary General of the Basel Committee on Banking Supervision, to explore the future of financial regulation under a hypothetical Trump 2.0 administration. Moderated by James Bowpitt, the conversation ranged from deregulation to the Basel III Endgame and the evolving landscape of crypto and AI regulation.
James Bowpitt: Let’s start with the basics. What do you think will be the immediate focus for financial regulation if Trump assumes office again?
Doug Elliott:
In my view, we’ll see a much stronger push for deregulation compared to Trump’s first term. This time, Trump will likely prioritise cementing his legacy, and deregulation has always been a consistent priority for him. Likely areas of focus include reducing capital requirements, revisiting supervisory frameworks, and easing prudential standards like the enhanced supplementary leverage ratio.
However, it’s worth noting that legislative hurdles will limit the scope of deregulation. The Democrats control a thin minority in the Senate and are unlikely to support substantial rollbacks of Dodd-Frank, so much of the change will happen through regulatory adjustments rather than new laws.
James Bowpitt: Bill, do you agree with Doug’s assessment?
Bill Coen:
Absolutely. I’d also add that personnel choices will play a critical role in shaping this agenda. Trump’s expected appointments, such as Travis Hill at the fdic and potentially Mickey Bowman at the Fed, align with his deregulatory vision. Personnel is policy, as they say. I wouldn’t be surprised if Trump leans heavily on acting appointments initially to accelerate these changes and bypass the delays of Senate confirmation.
James Bowpitt: The Basel III Endgame is a major regulatory milestone. How do you see this playing out under a Trump administration?
Doug Elliott:
I’d estimate about a two-thirds chance that Basel III will be finalised under Trump. However, the framework will need to be capital-neutral or slightly favourable to U.S. banks to gain broad support. Implementation might not begin until 2028, given the lengthy process of regulatory drafting, public consultation, and industry lobbying. Encouragingly, I’ve seen signs that banks, especially those with more traditional balance sheets, are increasingly receptive to Basel III’s calibrated approach.
Bill Coen:
I share Doug’s optimism. Most of the design and structure of Basel III have been heavily influenced by industry input, so the focus now is on calibration. Some banks with significant trading book exposures might feel a greater impact, but others will see minimal changes. I believe the framework will eventually be finalised, though likely with tweaks to the proposed capital increases.
James Bowpitt: Supervision often comes up as distinct from regulation. How might this evolve under Trump?
Doug Elliott:
Supervisory culture is much harder to change than regulations. Even during Trump’s first term, banks told me they didn’t see much change in supervisory behaviour despite the administration’s deregulatory rhetoric. Regulators are naturally cautious, and recent events like the Silicon Valley Bank failure make it even less likely that we’ll see significant shifts in supervision.
Bill Coen:
That’s a good point. Supervisors are under immense pressure to avoid the mistakes of the past year. No one wants to be seen as having overlooked warning signs. While the administration may push for a lighter touch, supervisors will likely tread carefully to avoid any perception of negligence.
James Bowpitt: Are there other areas where we might see regulatory developments under Trump?
Bill Coen:
Crypto and artificial intelligence (AI) are two key areas to watch. Both industries have been calling for regulatory clarity, and I expect we’ll see frameworks introduced that strike a balance between fostering innovation and ensuring consumer protection. These sectors are ripe for light-touch regulation that establishes guardrails without stifling growth.
Doug Elliott:
I completely agree. On crypto, there’s bipartisan support for establishing clearer rules. AI governance might take longer to materialise, but it’s another area where regulation will inevitably evolve. Both sectors are pivotal to the future of finance, and the administration will need to address them.
James Bowpitt: What about the U.S. role in international regulatory bodies like the Basel Committee?
Doug Elliott:
There was some speculation that Trump might adopt an America First approach and withdraw from organisations like the Basel Committee or the Financial Stability Board. However, recent signals suggest the U.S. will remain engaged, albeit with a focus on domestic priorities. I expect the U.S. will act as a brake on ambitious international initiatives unless they align with its interests.
Bill Coen:
That’s spot on. The U.S. benefits from strong global standards, especially as its banks operate extensively overseas. While I don’t foresee a withdrawal from these bodies, the U.S. will likely push for pragmatic and flexible standards that suit its domestic institutions.
James Bowpitt: Any final thoughts?
Doug Elliott:
A Trump second term will likely focus on recalibrating standards to support economic growth while maintaining financial stability. The balance between deregulation and robust supervision will be critical.
Bill Coen:
I agree. Basel III will get done, crypto and AI regulation will see progress, and supervisory practices will remain cautious. Ultimately, the Trump administration’s approach will lean deregulatory, but the inherent resilience of the U.S. banking system will provide a solid foundation for measured change.
This interview offered a comprehensive look at the future of financial regulation under a potential Trump second term. From Basel III to crypto and AI, Doug Elliott and Bill Coen provided valuable insights into the opportunities and challenges ahead.
