small and medium-size banks in the u.s. can look forward to regulatory relief under a donald trump administration, but risks loom for the biggest u.s. lenders. in the aftermath of mr. trump<u+2019>s victory , one thing investors can likely be confident in is that substantial deregulation is coming for smaller banks. bank stocks overall were trading higher<u+00a0>wednesday afternoon in anticipation of this. a bipartisan consensus has been building for some time that smaller banks are excessively burdened by the regulatory requirements of the dodd-frank legislation. there are proposals on the table to raise the statutory threshold for total assets from $50 billion to $250 billion under which banks must submit to annual stress-testing by the federal reserve. jeb hensarling, republican chairman of the house financial services committee, has proposed a bill that would go further , exempting any bank from a swath of regulatory requirements in exchange for holding substantially higher levels of equity capital. huge institutions such as j.p. morgan chase might figure it isn<u+2019>t worth it to raise the extra capital required. smaller ones that find it harder to cope with regulations due to their limited resources may be willing to take the trade-off. for the biggest banks, though, there also are reasons to fret over mr. trump<u+2019>s victory. the republican party platform in 2016 called for reinstating the glass-steagall separation of investment and commercial banking. top-ranking republicans in congress may not support it, but populist forces on both the left and the right have clamored for some kind of breakup of big banks. if a bill starts moving through congress to provide regulatory relief for smaller banks, the risk is that legislators may attach provisions pushing a breakup of big ones, notes kbw analyst brian gardner. that could be the price to get an otherwise deregulatory bill through a possible senate democrat<u+00a0>filibuster. investors in many bank stocks have some reason to celebrate<u+00a0>wednesday. but for the biggest banks, there is just too much uncertainty to get comfortable. write to aaron back at aaron.back@wsj.com corrections & amplifications: bank stocks rose wednesday afternoon in anticipation of deregulation for smaller banks. an earlier version of this article incorrectly stated they did so monday morning. (nov. 9, 2016)
relief coming for some banks, but not the biggest  - wsj
aaron back