Stock Strategist: What Regulatory Rollback Could Mean for Financials

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist What Regulatory Rollback Could Mean for Financials For now, fair value estimates and moat ratings are unchanged. [tab_bar] by Morningstar | 2/6/2017 5:30:00 PM Advertisement Order Now - Morningstar's ETF Newsletter Exchange-traded funds offer income-seeking investors viable global alternatives that weren't available just a few years ago. Morningstar ETFInvestor offers fresh ideas for income and total return and provides a bird's-eye view of valuations around the globe, portfolio construction advice, and data on the biggest and most popular ETFs. [Click to try >>]( On Feb. 3, President Donald Trump signed orders to review the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act as well as the Department of Labor’s fiduciary rule. Following is an initial look at how this could affect the financial services companies that Morningstar covers. No Panacea for Big Banks We see Trump’s plans as an opening salvo in an effort to ease the regulatory burden on the nation’s banks. However, efforts to repeal or replace the law in its entirety will be far more difficult, and we don’t expect significant boosts to banks’ profitability in the near future as a result of the rule review alone. According to law firm Davis Polk, only 77.5% of the rules under Dodd-Frank had been finalized by July 2016. The mandated review and any changes to these rules could be painfully slow as well. Furthermore, we don’t think the biggest banks--[Wells Fargo]( [WFC]( [Bank of America]( [BAC]( om/go/?uidm=18FX5F5OIZGV&murl=DSDTE3EY), [JPMorgan Chase]( [JPM]( and [Citigroup]( [C]( be first in line for regulatory relief. We are therefore not making any changes to our fair value estimates or our economic moat ratings, though the capital return potential at Citigroup (which is trading at a 20% discount to our fair value estimate) could be accelerated by an easing of certain restrictions. To read more, click [here](. Sponsored Links [Buy a Link Now]( New: ETF Managed Portfolios Center On [MorningstarAdvisor.com]( Tap into the industry's best source of information on ETF strategies for financial advisors. See key performance data, screen for specific strategy attributes, and learn more about this fast-growing area of the investment marketplace. [Click to get started](. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio]( ). Search Most Recent Articles [Low-Cost Exposure to the Consumer Discretionary Sector]( [Slowing Growth Bites Colgate’s Sales, but Profits Sparkle]( [Tax Reform Could Mean a Push Toward Roth]( Latest Analyst Reports [Momenta Pharmaceuticals]( [Eversource Energy]( [Weyerhaeuser]( [Crown Holdings]( [Fortinet]( ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com](mailto:%20joe@morningstar.com). ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2017. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.