CEOs ponder a new game, with Trump's rules

Businesses are struggling to map how Trump's election will reshape policy

“If you were to look at our game board of all the possible outcomes of the election, this one wasn't even on the sheet.”

That was how Mark T Bertolini, chief executive of the large health insurer Aetna, described the election of Donald J Trump as the next president. He was speaking with me last Thursday on stage at The New York Times’s annual conference, DealBook: Playing for the Long Term.

“We started with a fresh piece of paper yesterday. We had no idea how to approach it,” Mr Bertolini said.

Business executives across the nation and the world have been whipping out fresh pieces of paper to map how Trump’s election and Republican control of the White House, Senate and House – which may make Washington’s notorious gridlock a memory – will reshape economic policy.

The stock market has jumped, taking many prognosticators by surprise, in anticipation of the seismic changes  Trump has promised: A repeal or refashioning of the Affordable Care Act, a dismantling of the Dodd-Frank regulations for Wall Street, a substantial haircut for corporate and personal income tax rates, and a major infrastructure spending program, among other things.

While the new conventional wisdom may be that the nation is about to see comprehensive change, the truth is that it is likely to be more incremental than across the board.

Take, for instance, the Dodd-Frank Wall Street Reform and Consumer Protection Act. While you would think much of the finance industry would salivate at the chance to rid itself of the law, its view is more nuanced. Most companies have made large investments and changes in their business practices to comply with the law. So it's hard to see how even the law's die-hard opponents in the industry would press for the full repeal that Trump said he would pursue.

Backpedaling on some of his campaign pledges has already begun, including the promised “repeal” of the Affordable Care Act.  “That omelet has been made; that toothpaste is out of the tube,” Lloyd C Blankfein, the chief executive of Goldman Sachs, said at the conference.

“I wouldn’t want regulation to be repealed in toto,” he added. “If you want to be good for bankers, you have to have policies that would be good for economic growth.”

More likely than a repeal, Trump’s administration will try to eliminate the components he has criticised most. A Trump administration could try to weaken the Consumer Financial Protection Bureau, the watchdog agency created by Dodd-Frank, which Republicans loathe, for example.

“The CFPB probably won't be eliminated,” Ian Katz, a research analyst at Capital Alpha Partners in Washington, wrote in a note to clients. “It would be horrible politics and optics to get rid of an agency that was established to protect the little guy.”

Katz predicted that the Trump administration would be able to push through a switch that critics of the agency have long lobbied for: a shift in control of the consumer bureau from a single director to a bipartisan commission.

Trump might also focus on changing a rule for small banks that grow to more than $10 billion in assets. 

Currently, such growth catapults a bank into a new regulatory category, one that comes with much stricter scrutiny and more elaborate reporting requirements. This rule has been criticised by the banking industry as an impediment to growth and competition.

© 2016 New York Times News Service