The Trump transition team has started to explore pathways to dramatically shrink, consolidate or even eliminate the top bank watchdogs in Washington. 

In recent interviews with potential nominees to lead bank regulatory agencies, Trump advisers and officials from his newfound Department of Government Efficiency have, for example, asked whether the president-elect could abolish the Federal Deposit Insurance Corp., people familiar with the matter said. 

Advisers have asked the nominees under consideration for the FDIC, as well as the Office of the Comptroller of the Currency, if deposit insurance could then be absorbed into the Treasury Department, some of the people said.

Any proposal to eliminate the FDIC or any agency would require congressional action. While past presidents have reorganized and rebranded departments, Washington has never shut down a major cabinet-level agency and rarely closed other agencies like the FDIC that are not.

Bank executives are optimistic President-elect Donald Trump will ease a host of regulations on capital cushions and consumer protections, as well as scrutiny of consolidation in the industry. But FDIC deposit insurance is considered near sacred. Any move that threatened to undermine even the perception of deposit insurance could quickly ripple through banks and in a crisis might compound customer fears.

After several banks failed last year, customers panicked about whether their deposits were safe at smaller banks. Many fled to the biggest of big banks who are perceived to be so important that the government would never let them fail. Since then, banks have been calling for wider deposit insurance protections to keep smaller banks competitive.

The discussions underscore the drastic approach Trump could take in his attempt to slash the size of the government and ease oversight, including for the highly-regulated financial industry.

Potential bank regulator nominees have interviewed with Treasury Secretary pick Scott Bessent and the new DOGE department, the outside advisory group co-chaired by Elon Musk and Vivek Ramaswamy, some of the people said. 

Musk last month also called for the elimination of the Consumer Financial Protection Bureau, an agency Republicans have long hated. “There are too many duplicative regulatory agencies,” Musk said. 

Trump advisers and potential nominees have also discussed plans to either combine or otherwise restructure the main federal bank regulators: the FDIC, OCC and the Federal Reserve, the people said.

Project 2025, a policy document drawn up by the Heritage Foundation and former Trump officials, calls for the merging of the FDIC, OCC and nonmonetary policy parts of the Fed, along with the National Credit Union Administration. (Trump has said he had nothing to do with Project 2025.)

Rep. Andy Barr, a Republican from Kentucky and Trump ally on the House Financial Services Committee, has backed the plan to eliminate or drastically alter the CFPB and said he wants to get rid of what he calls “one-size-fits-all” regulation for banks. 

Banks have a love-hate relationship when it comes to the oversight of multiple regulators. Some like it to the extent it can allow them to shop between regulators for a lighter touch. But they often complain about mixed messages and contradictory rulings.

“We could use some streamlining on financial regulation,” said former FDIC Chair Sheila Bair. “But it is really hard to get done.”

A proposal to eliminate a bank regulator would struggle to gain the support of Congress and the industry, she said. 

“Banks may complain, but at the end of the day, they like to have their own regulator they have a relationship with,” Bair said. “They like the status quo.” 

Frank Sorrentino III, chief executive at ConnectOne Bank in Englewood Cliffs, N.J., said there needs to be more alignment among the regulators. But it is helpful for the system to have multiple regulators that understand the “size, complexity and future challenges” of different banks, he said.

With technology such as artificial intelligence, for example, “you need a different set of regulators to be able to manage the banks that utilize these things at full force than others that have a more simplistic business model,” he said.

In a separate plan that has been floated with the transition team, the FDIC, OCC and parts of the Fed wouldn’t merge but only one of them would continue to regulate banks, one of the people said. The other agencies would keep only nonregulatory staff. 

At the CFPB, consumer-education jobs could replace regulatory and supervisory jobs, another person said. 

In any plan, significant job cuts are likely. Trump is expected to reinstate an executive order that made some federal workers easier to dismiss, known as Schedule F. Stricter return-to-office policies that could prompt workers to leave are also being discussed, the people said. 

Major bank-regulation changes are uncommon outside of financial crisis. Most banking rules today were implemented after the Great Depression or the 2008-09 financial crisis, when bipartisan groups and popular opinion called for stricter bank protections. Republicans will hold thin majorities in both the Senate and the House next year, but are unlikely to find any Democratic support for dramatic changes.

Democrats were the party after the 2008 crisis to close one banking regulator. Many of the worst offending lenders in that crisis were supervised by the Office of Thrift Supervision, which wasn’t a Cabinet-level agency. The 2010 Dodd-Frank law abolished the agency by folding it into the OCC.