By Arasu Kannagi Basil, Pete Schroeder and Lananh Nguyen

Dec 13 (Reuters) - U.S. bank stocks were unfazed on

Friday after a report that President-elect Donald Trump's team

had floated the idea of shrinking or eliminating a top banking

regulator, with analysts saying such a plan would not win the

necessary political backing.

In recent interviews with bank regulator candidates, Trump

advisers have asked whether the incoming president could abolish

the Federal Deposit Insurance Corp (FDIC) and move its deposit

insurance function into the Treasury Department, the Wall Street

Journal reported on Thursday, citing people familiar with the

matter.

Officials from the newly founded Department of Government

Efficiency (DOGE), which has been tasked with finding major

government savings, participated in the interviews, the WSJ

said.

However, while the current system comprising three

federal and multiple state bank regulators is complex, a major

restructure would struggle to garner the political support

needed to get through Congress, which is also expected to be

tied up on tax reform and crypto legislation next year, analysts

and academics said.

"It would require congressional action and despite the

Republican party majority in both the Senate and the House, it

would require support from the Democrats which remains very

unlikely," ING sector strategist Marine Leleux wrote in a note.

Bank stocks were little changed on Friday.

The Trump transition team has been interviewing candidates

for financial agency roles, including the bank regulators, in

recent days, said two people with direct knowledge of the

matter. DOGE officials have been involved in some of those

interviews, one said.

But at least one candidate for a top regulatory post was not

asked about overhauling or streamlining the agencies, suggesting

the idea is still in its early stages, said the second source.

Spokespeople for the transition team did not immediately

provide comment, while an FDIC spokesperson declined to comment.

Trump has pledged to slash burdensome rules but has said

little about bank regulation. Last year, the pro-Trump Heritage

Foundation's Project 2025 manifesto called for "more

streamlined" bank supervision through the merger of the FDIC

with other bank regulators. During his campaign, Trump disavowed

the project but has since announced plans to appoint key

contributors to prominent roles in government.

"Even if you could get it through Congress...it would be

an exceedingly heavy lift and have lots of unintended

consequences," said Julie Hill, dean of the University of

Wyoming College of Law, noting the FDIC had the experience and

expertise necessary to oversee banks and safeguard the deposit

insurance fund.

The FDIC plays a key role in the financial stability of

the world's largest economy with its deposit insurance fund

backstopping trillions in insured bank deposits. The importance

of the FDIC in shoring up financial stability was once again

highlighted last year when three regional banks failed.

"It is the only regulatory entity whose professionals have

the expertise and ability to do bank resolutions," said Mayra

Rodriguez Valladares, bank and capital markets risk consultant

at MRV Associates.

Still, top U.S. banking executives expect Trump's incoming

administration will overhaul bank regulatory policy, including

by easing up on mergers, and shelving onerous bank capital

rules, while some academics said streamlining the system was

long overdue.

"There has been a massive duplication of function and

massive waste, and this is an incredible opportunity to

consolidate," said Rebel Cole, professor of finance, Florida

Atlantic University.