Wells Fargo’s New Boss Comes Out Swinging

Wells Fargo’s new boss has come out swinging. At the first gathering of big-bank chief executives since the U.S. election, Tim Sloan detailed a laundry list of rules he wants ripped up. Rivals were more guarded on the subject. It’s a bold move by a bank still reeling from a fake-accounts scandal.

Bank shareholders are already betting on a mini-bonanza once President-elect Donald Trump moves into the White House next month. The KBW banks index, for example, has jumped just shy of a fifth since Nov. 7. Shares in Goldman Sachs, Morgan Stanley and Bank of America have performed even better.

There’s plenty of reasons for bank owners and their executives to get excited. Bank earnings per share would jump around 18 percent, according to Morgan Stanley, if the Trump administration were to cut corporate tax rates to 20 percent from 35 percent – the kind of reform JPMorgan chief Jamie Dimon says he’s “begging” for.

Interest-rate increases add yet more to the bottom line. And the Republican-led Congress is likely to dial back some of the post-crisis reforms. At the very least, that would cut costs, if not add revenue.

Most of those appearing at the Goldman Sachs-run confab on Tuesday, though, were pretty circumspect. Bank of America boss Brian Moynihan simply said he’d like to redeploy or return to shareholders any excess capital. Aside from tax reform, Dimon only mentioned wanting regulators to have less leeway to interpret the rules. Grayson Hall, who runs Regions Financial, mentioned tax reform, but also introduced a note of caution about “potential disruption to global trade.”

Sloan, though, went straight for Dodd-Frank’s jugular: Banks, he said, have to carry too much capital and liquidity; the total loss-absorbing capacity rule should be scrapped; the Federal Reserve-run stress tests are too subjective; and complying with the Volcker Rule is too expensive.

Few of his peers are likely to disagree, but until last month they didn’t dare say so publicly as a large-scale overhaul of bank regulations seemed a pipe dream. That the boss of a bank under a regulatory cloud now feels able to do so is suggestive of an industry eager to flex its muscles.

Request a free trial of Breakingviews here.