Bloomberg's Liz McCormick and Edward Bolingbroke wrote:
The Treasury’s proposal to unleash financial sector animal spirits constrained over the last seven years by the weight of regulations is already sweeping through markets.
Just look at the ease in exchanging foreign-currency denominated loans for those in dollars, interest-rate swap spreads, and gauges of the cost to fund Treasuries through repurchase agreements.
Traders see the changes as allowing banks to move away from building huge coffers of ultra-safe debt and extend credit elsewhere in the system, as well as enabling them to beef up dealing Treasuries as funding trades become easier and cheaper. The knock-on wave to the financial sector could be in the order of $2 trillion in new liquidity, according to Deutsche Bank AG.
[...]
Basically, the Trump Administration is not so keen on many of the regulations that were brought in after the financial crisis of 2007/08. Even though it hasn't actually done very much yet, and we can't even be sure that he ever will (so many of the relevant departments are still full of empty offices because he's not getting on with the job of appointing the relevant officials), markets are starting to move and are giving us a hint of what the reaction might be.
(a spoiler here, providing background on what's going on)
So, NSG, is this a win? Or a loss? In my view, I generally think that the banking regulations created in Basel and adopted around the world were a good and necessary reaction to make the financial system safer. But there are also lots of maybe unanticipated consequences that throw some sand in the gears for seemingly little benefit. Trump's and the modern GOP's view that financial regulation is mostly bad and should be repealed or pared back is dumb. But this tweak seems not so bad.
But what do you think?
PS: As an aside... I wonder whether there'd be any interest in NSG for a general finance and financial markets discussion thread. Might be one of those things that no one cares about, but I would be keen if I others were interested.