BEFORE the presidential election, Wall Street dreaded Donald Trump as a dangerous, unpredictable and disruptive, if improbable, president. Since his victory, fear has turned to hope. Stockmarkets are at record highs and shares in financial institutions have been among the best performers. Mr Trump, it turns out, looks to big finance like good news. 

Partly this reflects Mr Trump’s change of tack. He campaigned as the leader of a rustbelt revolt against the besuited, pampered elites. As president-elect, he seems less of an outsider.

Among the rumoured names he has been mulling as his choice for treasury secretary are Jamie Dimon, boss of JPMorgan Chase, and Steven Mnuchin, a 17-year veteran of Goldman Sachs.

Wall Street’s access to the corridors of power seems likely to be unimpaired.

But the euphoria mostly reflects the finance industry’s excitement at one of the more achievable of Mr Trump’s campaign promises: to cut red tape. In a YouTube video this week outlining his priorities, he announced a new rule: for every new regulation, two old ones must be eliminated. No industry in America feels as browbeaten by regulators as does finance. It awaits the bonfire of the rule books with glee.

In this context, a speech on November 18th by Mary Jo White, the outgoing chair of the Securities and Exchange Commission (SEC), amounted to a swansong for the Obama administration’s approach to finance. Clearing up the wreckage of the 2008 crisis, Barack Obama encouraged a punitive approach to the industry. (“You don’t want to mess with Mary Jo” was his character reference). In her speech she outlined a “new” and “unrelenting” model for combating white-collar crime. But she, and an entire layer of Obama-appointed regulators, are on their way out.

By February, with the start of the Trump administration, their regulatory legacy may also be under threat—whether the celebration of large dollar settlements from errant institutions or the production of ever more rules. Defining this approach was the Dodd-Frank act, enacted in 2010, which Mr Trump has vowed to dismantle. The act is so sprawling that 30% of its 390 distinct rules have yet to be adopted, according to Davis Polk, a law firm.

Even executed partially, Dodd-Frank had vast consequences. A study by George Mason University’s Mercatus Centre, using data up to 2014 (when only 59% of the rules had been adopted), showed that Dodd-Frank had already led to 27,669 new “regulatory restrictions”.

This tally excluded components of Dodd-Frank too large to be quantified, such as Section 1502 which gave the SEC a role in monitoring corporate supply chains in the interest of blocking minerals from certain African countries.

Dodd-Frank is so intricate that, like the institutions it is supposed to constrain, it seems too big to tame. In fact, it has three features that make it malleable—fragile, even. The first is that many of its rules must be implemented by agencies, which can thereby reshape them and pick and choose among them. The second is that the authority to do so is often protected from outside tampering. “The great irony of Dodd-Frank,” says J.W. Verret, a law professor at George Mason University, “is that all that discretion can be used to limit regulation.”

This is particularly true because of a third characteristic. It funnels authority through a small number of crucial presidential appointments. Mr Trump will have the right to nominate a vice-chairman of the Federal Reserve in charge of regulation, displacing Daniel Tarullo, who is considered by many banks to be the single most important federal regulator. The new president will also be able to nominate every board member of the Financial Stability Oversight Council, a Dodd-Frank creation which determines which institutions are too big to fail. And he will be able to appoint the director of the Consumer Financial Protection Bureau, a controversial agency also spawned by Dodd-Frank.

When the facts change
A proposed rewrite of financial regulations by Jeb Hensarling, chairman of the important congressional committee on finance (and another candidate for treasury secretary), would rein in these entities. In the past, Democrats would have opposed this. They may think differently now that they will be controlled by Mr Trump.

The new president will have opportunities, through appointments, to change more established departments, too. At the SEC Ms White’s departure will leave only two of five commissioners and deep divisions over big issues such as disclosure by companies and funds, the structure of equity markets and the lack of a coherent plan for “capital formation” (ie, matching capital with entrepreneurs). Mr Trump will be able to nominate commissioners at once, which would transform the SEC’s agenda.

Unlike the SEC, both the justice and labour departments have been hyperactive over the past eight years. The Department of Justice played a central role in prosecuting financial offenders.

Cases were often settled for large sums, but these left no enduring legal principle that the new attorney-general will have to follow. The Department of Labour aggressively expanded its remit, most notably because of the adoption of a simple-sounding but vastly complex new regulation, the Fiduciary Rule, which gave it a key supervisory role over $3trn (and counting) in retirement savings. Revoking that will not be easy. But the new labour secretary, again a Trump appointment, can delay implementation and otherwise temper adoption.

Since the election, formal comments by the Trump transition team have been brief, largely calling for an end to bail-outs and red tape, and more capital for small businesses. A first phase of reform may be structured to capture Democratic support: a narrow bill offering regulatory relief for community banks and imposing restrictions on bail-outs. But more may follow. A new version of Mr Hensarling’s plan is believed to be in the works. Paul Atkins, a former SEC commissioner with libertarian leanings, is heading a transition team covering the regulatory agencies.

The new administration has more pressing priorities than changing financial rules, notably trade, immigration, taxes and infrastructure spending. But Wall Street knows it is in Mr Trump’s sights. And it seems to relish the prospect.