When Steve Bannon left the White House in a hurry, we pointed out that Mr. Bannon’s personal bête noire – Gary Cohn – would face considerable obstacles from the alt-right to getting either a nod from the President or confirmation by the Senate regardless of how much of a shoe-in some now may think he is for Fed Chair.  Goldman Sachs and the dark forces it embodies for the alt-right will bring out every accusation in social media that it can hurl at the White House officials it loathes, likely damaging them considerably regardless of the scurrilous and even hateful nature of some forthcoming accusation.   However, Mr. Bannon’s targets go beyond his former colleagues.  Freed from whatever constraints may have from time to time bound him in the White House, he’s now a free agent with a still larger following.  Despite the tone of much recent Trump Administration financial-policy rhetoric, we look for fired-up economic nationalists to take on any initiatives that can be characterized – fairly or not – as favoring Wall Street.  No wonder the Fed is so worried about a rewrite of the post-crisis framework.

Even ahead of Jackson Hole, the Fed was targeting what it fears will be wholesale retreat from the systemic-designation and big-bank framework it has worked so hard to construct since 2008 taught it so many hard lessons all at once.  Could it be the Treasury report that has suddenly riled the Fed?  Surely not – first, the Treasury financial-reform position paper was remarkably mild given what economic nationalists such as Mr. Bannon have demanded.  Repeal of deposit insurance?  Not there.  OLA repeal?  Not there for now.  Elimination of all of the post-crisis capital, liquidity, and stress-test requirements?  Not there despite proposals for significant changes to all of them.  An end to the source-of-strength doctrine favored by some conservatives? Not a murmur.  High leverage-capital requirements?  AWOL.

And so it went.

Compare the wish lists of the conservative financial analysts to the Treasury report and there’s little in common.  Then look over at Breitbart or Drudge, and the populist fervor is at full pitch.  “Wall Street” and its easy proxy, the largest banks, are frequent targets of opprobrium along with the Federal Reserve and most things foreign.  It might seem surprising that Breitbart would laud Teddy Roosevelt – perhaps the most progressive president with a record of trust-busting to do him proud.  But it did so just last week, when an article on the site pointed to just this trust-busting as a top U.S. economic priority.

If President Trump hews to what he thinks is his base – and his Phoenix speech on Tuesday suggests he will do so at least when in need of personal affirmation or a solid GOP base – then his campaign rhetoric will reassert itself over statements to which capital markets cling for comfort.  On the hustings, Mr. Trump called for breaking up big conglomerates, resurrecting something akin to Glass-Steagall, ending TBTF, and adopting what his inaugural address spelled out as his “America First” policy.

Since then have come a series of executive orders on financial regulation that have been long on rhetoric and short on specifics.  Even Chair Yellen expressed specific support for the Administration’s orders – a sure a sign as any that the devil would indeed be in the details.  Mr. Trump himself has vacillated on those issues to which he has personally paid attention, focusing most directly on small banks and small business doubtless because he knows how large they loom in his political base. 

If the President goes back to this as Phoenix and subsequent tweets suggest, then this agenda – which is far afield from Treasury’s, will dominate the White House, be heaped with praise from alt-right media, and dramatically change the tenor of future financial-reform and monetary-policy deliberations.  Ms. Yellen today stood firm, but she can only stand for so long against concerted attack of the ferocity Mr. Bannon is likely to unleash.