Trump's Regulatory Reins Could Erode Market Trust, Warns $2.3 Trillion Asset Manager

The incoming Trump Administration's executive order to "reins in independent agencies" has raised concerns among investors and financial experts alike. The order, signed late on Tuesday, requires federal agencies to submit draft regulations for review and consult with the White House on their priorities and strategic plans. Additionally, the president will set "performance standards" for these agencies. While the White House has exempted the Federal Reserve's monetary policy functions from the order, some market participants have questioned the permanence of this decision and the central bank's supervisory role remains targeted.

Vincent Mortier, chief investment officer of Amundi, which manages €2.3 trillion in assets, has warned that the Trump administration's approach could erode trust in the U.S. financial system and the dollar's status. Mortier stated, "If everything is put under [executive power], with an agenda for deregulation, crypto, digital push — and many conflicts of interest everywhere, it is the start of the end of how democracy is working. It’s quite dangerous, really." He further emphasized that the dollar and the proper functioning of U.S. markets rely on trust, and any erosion of that trust could have significant implications for both domestic and international investors.

The Trump administration's focus on deregulation and its aggressive use of sanctions have also raised concerns about the stability and predictability of U.S. foreign policy. The administration has lifted sanctions on Israeli settlers in the West Bank, designated Mexican drug cartels as Foreign Terrorist Organizations, and imposed sanctions on the International Criminal Court. These actions, along with the administration's support for digital assets and reversal of Biden-era restrictions on banks working with crypto firms, could create perceptions of unfairness and favoritism, further eroding investor confidence.



The potential rollback of beneficial ownership requirements and the deregulation of the financial sector could also impact market trust. The Trump administration may seek to amend or repeal aspects of the Corporate Transparency Act, which requires companies to disclose beneficial owners to FinCEN. Additionally, the administration's deregulatory agenda could lead to a more lenient regulatory environment, potentially increasing risks for investors.



In conclusion, the Trump administration's regulatory approach, as outlined in its executive order and other policy initiatives, could potentially erode market trust and investor confidence. Investors and other market participants should be aware of these potential implications and consider the risks associated with the administration's deregulatory agenda. As Vincent Mortier warned, the erosion of trust in the U.S. financial system and the dollar's status could have significant consequences for both domestic and international investors.