• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Financial Services

Good News for Goldman Sachs: Trump Likely to Alter Dodd-Frank

Dodd-Frank's proprietary trading and position limit rules are seen as burdens on investment banks.
By DANIEL DICKER Jan 26, 2017 | 03:00 PM EST
Stocks quotes in this article: GS, C, MS

The new Trump administration is signaling that several trends of the previous eight years of the Obama administration are about to fall. He's already signed executive orders that put pressure on Obamacare and help to move forwards the Keystone and Dakota Access pipelines, both temporarily stopped by the previous president.

One place where Trump has yet to put his mark is on Dodd-Frank legislation, but today a letter went out from the Futures Industry Association (FIA) that may give him the opportunity to push back on that 2010 bill -- and that would undoubtedly mean a better environment for investment banks.

Walt Lukken, the CEO of the FIA today sent a letter to the White House and to Congressional leaders, calling for a wholesale review of all financial regulation. "While some elements of Dodd-Frank may warrant repeal, others simply require reform," Lukken wrote today. In essence, the leading organization lobbying for the benefit of futures and derivatives traders is asking the White House to eviscerate Dodd-Frank.

It's not an idle request from an impotent group. Lukken was the lawyer that stood beside Sen. Richard Lugar, R-Ind., during his many years as head of the Agricultural Committee, the body responsible for oversight of futures and other derivatives. He also served as the chairman of the Commodity Futures Trading Commission (CFTC) from 2007 to 2009, which is the agency that enforces governmental regulations for derivative trading. It was from the CFTC post that Lukken joined the FIA as its CEO.

So Lukken already has strong ties with government and especially this particular one dominated by Republicans, which is now loaded with members from the investment bank Goldman Sachs, including Treasury Secretary Steve Mnuchin and advisers Gary Cohn and Steve Bannon.

It's been no secret that Goldman Sachs has been slow and unhappy in complying with Dodd-Frank directives, particularly on proprietary trading and position limits, as well as increasing liquidity restrictions.

But with this letter from the FIA, it's a likely spot for the new president to look to roll back some of these bank regulations, and I'm convinced he will order such a review in the next few weeks.

We could argue the risk of again allowing the investment banks to again expand in proprietary trading opportunities, but the bottom line is that investment bank stocks are likely to increase the run they've already been experiencing since the November election.

Increasing interest rates, another likely trend during the next few years, will also benefit the banks, so reducing leverage ratios or again opening up stronger commodity and bond trading operations will only benefit them more. It seems a perfect storm of good news is on the horizon for names like Goldman Sachs (GS) , and Action Alerts PLUS holding Citibank (C) and Morgan Stanley (MS) .

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Dicker had no positions in the stocks mentioned.

TAGS: Regulation | Markets | Financial Services | Investing | Politics | Stocks

More from Financial Services

Stay Away From These Types of Stocks, They're Radioactive

Jim Collins
Mar 24, 2023 2:35 PM EDT

Here's what you're better off buying. I certainly have.

Expedition Everest RE: Let's Scale the Reinsurer's Charts

Bruce Kamich
Mar 24, 2023 12:35 PM EDT

Share prices quickly turned lower in March.

Singapore Tops Hong Kong as Asia's Leading Financial Center, NYC Leads World

Alex Frew McMillan
Mar 24, 2023 6:36 AM EDT

An art piece with a political message has been censored in Hong Kong, one of the signs that it has lost its crown as 'Asia's world city.'

Block Stock Sinks Like a Rock After Hindenburg Report

Bruce Kamich
Mar 23, 2023 11:00 AM EDT

Here's what traders should do now.

Looking for New Trade Ideas? Let's See What Insiders Are Buying

Bret Jensen
Mar 22, 2023 9:45 AM EDT

A number of insiders are giving a nice vote of confidence as worries about the banking system have spiked.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:56 PM EDT PETER TCHIR

    Very Cautious

    I am very cautious here. I don't like how the c...
  • 08:58 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How to Adjust Your Trading Style as Market Conditi...
  • 05:00 PM EDT CHRIS VERSACE

    AAP Podcast on the Fed Decision!

    Listen here!
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login