Wall Street's regulatory gains set to stand even under Biden
Send a link to a friend
[October 05, 2020]
By Pete Schroeder and Michelle Price
WASHINGTON (Reuters) - A victory for
Democratic presidential nominee Joe Biden on Nov. 3 would spell the end
of the party for the banking industry which has enjoyed more than $40
billion in regulatory cuts under U.S. President Donald Trump's
business-friendly administration.
But the industry is likely to keep many of its wins as Democrats
prioritize more pandemic aid, healthcare, tax reform and financial rules
that address racial injustice, environmental and inequality issues,
rather than attacking banks, said nearly a dozen lobbyists and policy
experts in Democratic circles.
Banks and investors were preparing for a Biden victory over the weekend
after Trump tested positive for COVID-19 on Friday, in a blow for his
campaign.
"A hypothetical Biden administration will be confronting an economy
mired in COVID-19, an unsustainable climate policy, a healthcare system
whose flaws were exposed by the disease," said Aaron Klein, a former
Treasury Department official during the 2009 financial crisis that badly
marred Wall Street's image.
"This is not 2009 where the stability and soundness of the financial
system is the top priority for restoring the economy and the semblance
of normalcy," said Klein, who is now a policy director at Washington
think tank Brookings Institution.
From the relaxation of capital, leverage, liquidity, swap trading and
speculative investment rules, to lighter-touch supervision and
enforcement, banks have enjoyed a bonanza under the Republican-led
Senate and Trump appointees who say the rules were overly burdensome,
stymied lending and hurt the economy.
Biden, who was also accused of being too cozy with Wall Street as a
senator and later Barack Obama's vice president, has rarely attacked
Trump's financial giveaways and has said relatively little on financial
reform more broadly.
As progressives pull the Democratic party to the left, policy experts
expect a Biden administration to be tougher on financial firms than both
the Trump and Obama administrations. Some liberal groups are already
pushing Democrats to consider repealing several Wall Street-friendly
rules.
But while Democrats may swiftly overturn some financial rules if they
take the Senate, they are likely to focus legislative efforts on Trump
healthcare, immigration, environmental and tax policies they hate more,
said the sources.
That would leave most of Trump's Wall Street giveaways intact initially,
and put financial policy in the hands of Biden's regulatory appointees
who would get to choose whether to spend years unraveling their
predecessors' work.
"The personnel appointed to draft and carry out these rulemakings will
have particular importance and also far more independence than under the
Trump administration," wrote D.C. research group Beacon Policy Advisors
in a client note.
[to top of second column] |
U.S. Democratic presidential candidate and former Vice President Joe
Biden speaks while making a campaign stop in Pittsburgh,
Pennsylvania, U.S., September 30, 2020. REUTERS/Mike Segar/File
Photo
Progressive firebrand Senator Elizabeth Warren would hold sway over some
appointments, particularly at the consumer watchdog which she helped create, and
bank regulators.
Overall, though, lobbyists said they would expect a diverse mix of progressives
and moderates, even though few are likely to come straight from Wall Street.
"I don't think you'll see the progressive liberals getting all the appointments
they want," said Richard Hunt, CEO of Washington group the Consumer Bankers
Association.
Biden's campaign, which did not immediately comment, has said he plans to use
all available tools to reverse Trump's damaging policies. Warren's office did
not respond to a request for comment.
RACIAL JUSTICE, EQUALITY
Progressives have criticized Trump's watchdogs for easing some post-crisis
capital, liquidity and leverage requirements, changes which have saved banks
more than $40 billion, according to industry estimates. Many centrist Democrats
believe, however, that those rules were ripe for review and are wary of getting
bogged down rewriting them again, the sources said.
Appointees are expected to prioritize policies on which Democrats broadly agree
- boosting consumer protections and measures to help tackle racial injustice,
diversity, wealth inequality and climate change, said Graham Steele, a director
at Stanford Graduate School of Business and formerly a senior Democratic aide on
the Senate Banking Committee.
Those policies include boosting financial inclusion; cracking down on predatory
lending, overdraft fees, and debt collectors; strengthening fair lending rules;
overhauling the credit reporting system; halting Trump's housing finance
reforms; and imposing corporate climate change risk disclosures and bank climate
risk controls.
Some measures could put banks on the defensive. Others may offer opportunities
for the industry, which has improved its standing in Washington by helping the
government distribute more than $500 billion in pandemic aid, said lobbyists.
"I'm not worried about being shut out," said Hunt. "We have so many people
employed in every state and district and we provide so much to the economy."
(Reporting by Michelle Price and Pete Schroeder; Editing by Nick Zieminski)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |