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Analysis: Bank Deregulation Is Likely This Year, And Here's What It Might Look Like

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Analysis: Bank Deregulation Is Likely This Year, And Here's What It Might Look Like

The latest reports on the Senate bank deregulation bill suggest the bill could come to a vote shortly after the Presidents’ Day recess. It's likely the bill becomes law by year's end, but it's far from a sure thing, Height Securities analyst Ed Groshans said in a Tuesday note. 

As it stands, Groshans said the bill has a 65-percent chance of becoming law in 2018. If enacted, the legislation would raise the systemically important financial institution asset threshold from $50 billion to $250 billion, reducing the number of institutions that would be subject to the highest level of regulatory scrutiny and capital reserve requirements.

While there is a risk the House would amend the bill to the point where it would lose support from Senate Democrats, Groshans said the bill will likely end up on the books while Republicans still control both houses of Congress.

“First, House Financial Services Committee Chair Jeb Hensarling (R-TX) announced his retirement and this bill offers him the best opportunity to amend the Dodd-Frank Act (DFA), a formidable feat,” Groshans said. “Second, a number of other key House Republicans also announced their plans for retirement, which could put control of the House in play — and a Democratic House majority would be loathe to amend DFA in any manner.”

Groshans said the following stocks would be the biggest winners from relaxed regulations:

  • SunTrust Banks, Inc. (NYSE: STI)
  • American Express Company (NYSE: AXP)
  • Ally Financial Inc (NYSE: ALLY)
  • Citizens Financial Group Inc (NYSE: CFG)
  • Fifth Third Bancorp (NYSE: FITB)
  • Regions Financial Corp (NYSE: RF)
  • Zions Bancorp (NASDAQ: ZION)
  • Comerica Incorporated (NYSE: CMA)

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