Goldman Sachs expects the White House to untie the banking sector. Can deregulation reverse the trade risk dilemma?

The Zhitong Finance App learned that during Goldman Sachs Group's earnings conference call, David Solomon conveyed a clear message to US officials: he expects regulations to be relaxed. “I think this is likely to happen,” Solomon said, particularly in terms of capital requirements. He appreciated the government's emphasis on making appropriate adjustments to financial services regulation and hoped that substantial progress would be made in capital, leverage, liquidity and regulation.

Solomon's remarks are reminiscent of Wall Street's optimism about deregulation under US President Trump, but this hope was soon overshadowed by the White House's erratic tariff policy. Despite this, Solomon pointed out that fears of a trade war have posed significant risks to the US and the global economy. However, he was encouraged by the Government's recent more gradual policy processes, which allowed for thoughtful negotiations with many countries.

While discussing the issue of exempting US Treasury bonds from the so-called supplementary leverage ratio (SUB), Solomon said that given the information conveyed by the government, he is optimistic that the government will take relevant actions. This reform will allow banks to buy more government bonds without affecting core capital adequacy ratios.

Furthermore, Goldman Sachs expects the Federal Reserve to revise the new capital rules plan for large banks once again. During the previous administration, Goldman Sachs lobbied vigorously and eventually proposed a number of revisions that would cut the expected impact on large banks in half.

Notably, Goldman Sachs and Washington's “revolving doors” have never stopped: from Hank Paulson to Steven Mnuchin, from Robert Rubin to Gary Cohen (Trump's first economic adviser), the investment bank continues to send financial elites to the White House.

However, the White House doesn't seem to be planning to cater to the financial industry. Treasury Secretary Scott Bessent said that in the past 40 years, Wall Street's wealth has grown more than ever before, and now it is the turn of ordinary people. This position suggests that while Goldman Sachs and other financial institutions are hopeful of deregulation, the government may pay more attention to the interests of ordinary people.