Davis Polk partner and Financial Institutions practice head Margaret Tahyar was featured on the Wall Street Journal’s Take on the Week podcast discussing what to expect when it comes to banking regulation in a second Trump administration, how it might differ from his first term and what regulations may mean for banks and crypto companies.

Speaking about what she expects in the coming year, Margaret said, “One of the changes that we are anticipating in 2025 is a lot more mergers, particularly in the regional bank space.”

In a discussion of expectations for regulation under the Trump administration, she noted, “All these systems in the financial sector, whether it’s private credit, whether it’s banks, are in a highly, highly regulated system. So I prefer to think, not in terms of regulation/deregulation, but basically looking at the efficiency of regulation. And that is what I think is happening or about to happen.”

When the hosts questioned how much the crypto industry is in competition with banks, she said, “I don’t think that crypto is [a] 100% competitor to banks … I kind of think we’re going to have two ecosystems living side-by-side in the same way we have non-bank credit living side-by-side with banks.”

Discussing how much regulation matters to banks, Margaret noted that it isn’t the only important piece to look at: “I think … what’s happening in the economy, what’s happening in what I’ll call regulatory change – because regulations that are set, folks have adjusted to it – and then the intensity of supervision, all three of those are going to have an impact on the banking sector and what they do.”

When asked what should get more attention in order to prevent another bank crisis, Margaret said, “Deposit insurance reform. And that’s going to take Congress. I think there are two or three very simple things that Congress could do that would prevent the kind of panicked run that we saw last time. They could raise the insurance limit index for inflation; they could raise it a lot for what I’ll call operational accounts, for religious institutions, for charities, for small- and medium-sized businesses. There is an amount that could be chosen so that next time we don’t have this ‘pulling out’ of deposits.”

“What Trump 2.0 Means for Banks, Crypto and More,” Wall Street Journal’s Take on the Week (January 19, 2025) 

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