Voters in more than 70 countries went to the polls in 2024, in a year that proved difficult for incumbents to hold their offices.
The United States followed that trend, with Republican Donald Trump defeating Kamala Harris, the vice president and the Democratic Party’s choice to succeed President Joe Biden.
Republicans also narrowly defended their slim lead in the US House of Representatives and wrested control of the US Senate after four years of the Democrats in power. This outcome provided the Republican party with unified control over the legislative branch of government, albeit with razor-thin margins in both chambers of Congress.
With his return to the White House, Trump has brought a more focused approach and more detailed agenda than his first term. However, Republican control of Congress will not necessarily guarantee unanimous support for his legislative initiatives. Knowing this, expect the Trump administration to use its control over the executive branch of the government as an alternative path for implementing its agenda over the next four years.
Executive orders
Acting in his capacity as head of the executive branch of the federal government, the president has the authority to issue executive orders. These orders convey presidential directives to immediately shape policy and have the force and effect of law upon being signed (unless challenged in court). Executive orders offer the most efficient way for an incoming administration to begin implementing its agenda. However, they can play out as short-term solutions, as the next administration often undoes them on the first day.
Trump took office not worrying about Congressional action on several items. Some of the executive orders signed by Trump highlight a significant shift in US energy policy and a focus on his goal of achieving US “energy dominance.” Trump has signed executive orders removing the US from the Paris Agreement on climate change and removing regulations for oil and gas production, among others.
While the end run of executive orders helps implement an administration’s policies, they only go as far as the personnel in place to execute them. After all, it takes leadership in the federal agencies to sort out the details and enforce the orders. And again, even with a Republican Senate, confirmation hearings take time.
Personnel is policy
The second most efficient pathway for an incoming administration to enact its policy and regulatory or deregulatory agenda is through the personnel nominated and confirmed by the Senate to lead agencies and departments of the federal government. Trump quickly announced nominees for a number of key roles including Treasury Secretary, Commerce Secretary, Attorney General and Securities and Exchange Commission Chair.
Once through the Senate confirmation process, these nominees can shift the direction of entire departments and agencies within the federal government – and surprisingly quicker than one might think. For example, Trump-appointed financial regulators may take a dramatically different approach to enforcement, the effects of which will be felt for years to come.
One specific example of an important pending regulatory issue is the rewrite of the bank capital frameworks put forward by the prudential regulators in 2023. Late in the Biden administration, the prudential regulators recognised that the rewrite needed a rewrite, and it now hangs in limbo. Michael Barr – the chief architect of the proposed changes to the bank capital frameworks – stepped down from his position as Federal Reserve Board Vice Chair for Supervision on 28 February, and the Board will not undertake any major rulemakings until confirmation of a successor. As a result, the status of any future bank capital rulemaking is in question.
Additionally, during the campaign, President Trump branded himself as the most pro-crypto candidate to run for office. Expect any regulators nominated by Trump to embrace digital assets and to work with the White House, Treasury and Congress to provide the crypto industry with regulatory clarity. For certain, crypto companies welcome legislative and regulatory action that defines and cements the legitimacy of the industry.
Knowing the importance of key personnel, it is worth noting the arduous Senate confirmation process. It begins with private meetings between nominees and Senators, followed by Senate committee hearings, Senate committee votes and ultimately, a formal vote by the entire Senate. Generally cabinet level nominations take precedence. For many decades the Senate has deferred to the president on his nominees, but in recent years the process has become more contentious, and more of those final votes have seen the gap between ayes and nays shrink.
For independent regulatory agencies, like the Commodity Futures Trading Commission, it may take months until it has a confirmed permanent chair. On 11 February, the White House nominated Brian Quintenz to serve as permanent chair of the Commission. Until he is confirmed by the US Senate, Commissioner Caroline Pham will serve as the acting chair of the agency. While an acting chair of the CFTC holds much of the same authority as a Senate-confirmed permanent chair, acting chairs largely serve as caretakers if the president nominates someone else to chair the commission.
For priorities that cannot be accomplished by executive orders or agency action, the administration will turn to its final and most difficult pathway: the legislative branch of government.
Congressional agenda
Given the unified party control of the House, Senate and White House, Trump likely expects his fellow Republicans to follow his lead and approve his priorities. That will lead the administration to turn to Congress for implementing large priorities.
Republicans have been here before. They also enjoyed unified control of government for the first two years of the prior Trump administration. At the time, they used
their majorities in Congress to roll back and tailor certain provisions of Dodd-Frank, to implement a sweeping tax cut package, and to expand opportunities for oil and gas exploration and development on public lands.
Congress likely will revisit those same priorities again in the coming months. A large portion of the 2017 tax reform package – a signature achievement of the first Trump administration – will expire at the end of 2025. The administration has outlined extending the tax provisions as a top priority and will likely tie that extension to a broader budget bill, known as a reconciliation package. This legislative tool allows certain budgetary measures to pass with a simple majority in the Senate – avoiding the 60-vote threshold required to overcome the filibuster. Republican leadership has suggested they might include other items, perhaps immigration and increasing domestic energy production, in that legislation, too.
Just as Trump campaigned as the most pro-crypto candidate, many lawmakers prioritised the issue, too. At a bitcoin conference in July, Trump said, “From now on, rules will be written by people who love your industry, not hate your industry.” While new leadership in key regulatory agencies will reflect the administration’s support for crypto, the industry needs legislation to provide clarity about the federal regulatory framework over digital asset markets.
Last year, the US House passed a bipartisan bill that sought to provide regulatory clarity for the digital asset ecosystem. The bill would have greatly expanded the CFTC’s authority by providing it direct regulatory oversight over spot digital commodities. Without committing to specific language, the new administration and Congressional leaders in the House and Senate have set this type of legislation as a top priority.
Trump also established the US DOGE Service to modernise federal technology and software to maximise governmental efficiency and productivity.
While much remains unclear as this publication goes to print, the administration may have authority via executive order to implement some changes. Other, broader efforts likely would require Congressional action.
For example, in December the Bloomberg editorial board called for merging the CFTC and SEC, the latest instance of a proposal that has been raised over many decades. Ultimately, this type of recommendation – even if officially endorsed by the USDS – would require congressional action to achieve.
With the aforementioned narrow margins in both chambers of Congress, the president, speaker of the house and senate majority leader will carefully consider each attempt, as passing legislation will require spending political capital in order to implement sweeping policy proposals with narrow margins in Congress.
The new political landscape
Elections always bring significant changes to Washington, just as they did to many of the more than 70 countries with elections in 2024. Whether it is policy, people or both, it takes time for any incoming administration to adjust from campaigning to governing.
America is experiencing only its second president with non-consecutive terms. This new administration brings with it experiences, hard lessons and unique views on the process of governing.
At the same time, personalities, local politics and outside events always find a way to pose new challenges and disrupt even the best of intentions. Regardless, FIA sits well-positioned to work across party lines to represent the interests of our members and markets.
