(REFILE to fix spelling in graf 1)
By Will Caiger-Smith
NEW YORK, Dec 2 (IFR) - The election of Donald Trump in the
US does not necessarily mean the government will go easier on
banks, a former adviser in outgoing US President Barack Obama's
"The idea that Trump is going to mean less regulation than
Obama full stop, is way too simplistic an analysis," said Aaron
Klein, now a fellow and policy director at influential think
tank The Brookings Institution.
Klein served at the Treasury Department as deputy assistant
secretary for economic policy during the Obama administration's
first term, helping craft the Dodd-Frank Act.
Speaking at S&P's financial institutions conference in New
York on Thursday, Klein highlighted president-elect Trump's
willingness to move between extreme stances on banking
regulation during his election campaign.
As well as suggesting the Dodd-Frank Act should be rolled
back, Trump also advocated for the return of the Glass-Steagall
Act, which separated commercial and investment banks but was
repealed by then-president Bill Clinton in 1999.
Trump takes office on January 20.
"Markets have assumed in the short term with the rally that
they have got the deregulatory Trump, but maybe there is this
other one," said Klein.
"He has shown an ability to move unconventionally between
the two. We don't know which of the two we've got."
The S&P 500 Financials index has risen 14% since the
election, while average spreads on high-grade bank debt have
tightened by 3bp over the same period.
Klein also pointed to Trump's successful use of populist
rhetoric as evidence of a "giant retrenchment" away from
As cross-border institutions and trade agreements such as
the European Union and the North American Free Trade Agreement
come under pressure, there is no reason to believe global
banking regulation will escape intact, he said.
"If the world order is going to break down in terms of trade
the European Union ... why would anyone think banking
alone is going to remain an island, moving towards global
coordination?" he said.
(Reporting by Will Caiger-Smith; Editing by Natalie Harrison
and Shankar Ramakrishnan)