Trump vs. Harris: What it means for banks and credit unions

July 22, 2024 1:47 PM

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Side-by-side images of Donald Trump and Kamala Harris. — Former U.S. President Donald Trump (left) and current Vice President Kamala Harris (right). Harris is predicted to be the Democratic pick in the presidential race

President Biden's decision not to seek reelection , and to endorse Vice President Kamala Harris in his stead, sent ripple effects throughout the banking industry on Sunday.

"While it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term," Biden said in a letter announcing the decision. The move, while not unprecedented, took many by surprise. It has been more than 50 years since a sitting president decided not to run for a second elected term, when Lyndon B. Johnson made the same choice in March 1968 due to pushback from his oversight of the U.S. involvement in the Vietnam War and deteriorating health.

Biden has played a major role in shaping areas of the financial services industry during his time in office, including the Consumer Financial Protection Bureau's rule on credit card late fees, crypto custody banking, Community Reinvestment Act and more.

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American Banker's Claire Williams writes that despite Harris' stances on past legislative efforts, it remains uncertain how she would tackle future economic matters if elected as the country's first female president. Nevertheless, the next president will possess substantial sway over the course of economic and banking policy in the near future.

Some executives say that it's likely Harris would continue in line with the current administration's direction on banking regulations.

"In contrast to Trump's approach, which favored deregulation and a more hands-off approach, Harris' administration would aim to implement stricter controls and oversight to protect consumers and ensure financial stability," said Rick Kuci, chief operating officer for the New York-based small business funding fintech FundKite.

Trump was also able to enact significant changes throughout the banking industry during his tenure in the White House. While in office, Trump unwound the Department of Housing and Urban Development's Affirmatively Furthering Fair Housing rule, instituted temporary stoppages of evictions and foreclosures on HUD-backed properties and passed a regulatory relief bill that included numerous pro-banking reforms.

Jim Nussle, president and chief executive of America's Credit Unions, said in a statement that his organization remains committed "to [its] advocacy efforts on behalf of credit unions and the members they serve."

"As the general election cycle unfolds and changes emerge, our engagement with elected officials and candidates will continue to ensure focus on empowering credit unions to better meet the needs of Main Street America," Nussle said.

Below is a compilation of popular American Banker items that explore the legislative efforts of the past two administrations and offers insight into what the upcoming election could yield.

Stefani Reynolds/Bloomberg

CFPB outlines sweeping data proposal, drawing swift bank condemnation

Article by Kate Berry

The Consumer Financial Protection Bureau has proposed substantial changes to the Fair Credit Reporting Act that would require any company that collects and sells consumer data to be covered by the 1970 law.

The proposal marks a monumental shift in how courts have interpreted requirements under the FCRA, experts said, and could limit the ability of consumers to verify their identities to companies such as Netflix or Hulu while also opening the floodgates for data brokers and aggregators to be sued in class-action lawsuits.

The CFPB released a 96-page outline of its proposed rule from the White House in September 2023, where Vice President Kamala Harris and CFPB Director Rohit Chopra highlighted how the plan would aid American families by eliminating all medical debts from consumers' credit reports.

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Logan Cyrus/Bloomberg

White House, CFPB seek to ban medical debt from credit reports

Article by Kate Berry

Medical debt will be removed from credit reports and cannot be used in credit decisions under a proposal issued in June by the Consumer Financial Protection Bureau announced at the White House.

Vice President Kamala Harris announced the CFPB's proposed rule on medical debt at the White House event the afternoon of June 11. Under the proposal, consumers will still owe medical debts but they won't appear on credit reports and lenders would be prohibited from using certain medical billing information in underwriting or credit decisions.

"No one should be denied access to economic opportunity simply because they experienced a medical emergency," Harris said on a call with reporters. "Americans will see an increase in their credit score by an average of 20 points, which will mean every year an estimated 22,000 more American families will be approved for a mortgage and able to buy a home."

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Toni Sandys/Bloomberg

Why Kamala Harris matters to fintech

Article by John Adams

During the 2020 campaign, an obscure government initiative tied to Obamacare's troubled online rollout potentially positioned Harris as a key figure in modernizing government stimulus and disbursement payments.

The U.S. Digital Service formed with the recognition that government agencies are often lacking in automation, a shortcoming brought to light by the initially dysfunctional Healthcare.gov. The small agency — it generally has had about 200 staffers — has scored successes like a 2018 project that modernized Medicare payments, replacing last-century programming language with application programming interfaces and other payment processing technology as part of a badly needed upgrade.

The USDS also has a big supporter in Harris. As a Democratic senator from California, Harris called for the USDS' expansion, a 400% budget increase and its extension to state and local governments. The USDS could make digital wallets out of the Treasury Direct accounts, according to Robert Hockett, a law professor at Cornell University, who has worked on a "digital greenback" proposal that would use USDS to automate processing.

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President Biden Departs White House For Delaware

Ron Sachs/Bloomberg

Biden orders spy agencies to share more cyber-threat intel with banks

Article by Carter Pape

The White House issued a policy directive this year that will require the U.S. intelligence community to share more cybersecurity threat information with banks and other companies and create a regularly updated list of systemically important entities that are particularly important for national stability reasons to protect from cyberattacks.

Among the other impacts of the national security memorandum, the directive reaffirms the Cybersecurity and Infrastructure Security Agency, or CISA, is the national leader on efforts to secure the nation's critical infrastructure, which includes the financial services sector, and gives the U.S. Department of Treasury influence over which banks receive the new designation of "systemically important."

The new designation is different from similar ones issued by other regulatory bodies — for example, the Financial Stability Board's "systemically important financial institutions" designation. Banking sector trade groups expressed support for how the designation will be implemented.

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Bank, credit union advocates seek regulatory clarity in wake of AI order

Article by Frank Gargano

President Biden's effort to build a stronger governance framework for artificial intelligence has banks and credit unions wondering how regulators will incorporate the recommendations into current and future rules. But industry advocates say operating in an already highly regulated environment makes additional rules easier to manage.

The executive order doesn't single out any specified industry. Instead, it directs the Secretary of Commerce, acting through the director of the Department of Commerce's National Institute of Standards and Technology, to coordinate with the heads of other government agencies such as the Federal Housing Finance Agency, the Consumer Financial Protection Bureau and the Department of Homeland Security on guidelines "for developing and deploying safe, secure and trustworthy AI systems."

The order requires developers of generative AI models to follow agreed-upon procedures for testing the cybersecurity resiliency of the programs. These include ethical hacking drills known as "red team tests," which launch targeted cyberattacks on systems to identify vulnerabilities.

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Eva Marie Uzcategui, Bloomberg

How Project 2025 would affect bankers

Article by Claire Williams

A powerful conservative organization with advisors close to former President Donald Trump is proposing a full-scale overhaul of the federal government, including the role it plays in the banking system, upping the stakes for bankers in the 2024 presidential election.

In 2016, Trump won the presidency as a relative unknown in banking policy circles, said Ed Mills, managing director and Washington policy analyst at Raymond James.

"And the banks woke up the day after the election without knowing virtually anyone in the Trump orbit, and they didn't have a plan about what they wanted to ask for from the Trump administration," he said. "Neither Trump nor the banks are going to make the same mistake this time."

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Janet Yellen, U.S. treasury secretary.

Jeenah Moon/Bloomberg

Trump and Biden court Wall Street with very different visions

Article by Claire Williams

The Biden administration and former President Donald Trump have competing economic pitches to make to Wall Street in a tight presidential election that is increasingly centered on taxes and the economy.

"The Trump pitch is a lighter regulatory touch, keeping corporate taxes low," said Brian Gardner, chief policy strategist at Stifel. "The Biden pitch is stability, steady hand, you may not love us but we're not populists and we can get along."

Treasury Secretary Janet Yellen traveled to New York City in June, giving a fireside chat at the Economic Club of New York. She also privately met with over a dozen CEOs and business leaders — including major Democratic donors on Wall Street, the investment banker Blair Effron and private equity investor Mark Gallogly, according to a person familiar with the matter.

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Wall Street Frets Over A Revived CFPB Trump Left Toothless

Ting Shen/Bloomberg

CFPB ends Trump-era regulatory relief tied to pandemic

Article by Hannah Lang

The Consumer Financial Protection Bureau rescinded seven policy statements issued in 2020 under the Trump administration that gave flexibility to financial institutions dealing with fallout from the coronavirus pandemic.

The agency said effective April 1, 2021 it would undo relief from resolving credit card billing disputes, flexibility on exams and enforcement, and a reprieve from submitting loan data under the Home Mortgage Disclosure Act, among other policies.

"Providing regulatory flexibility to companies should not come at the expense of consumers," acting CFPB director Dave Uejio said in a news release. "Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB's first priority, today and always, is protecting consumers from harm."

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Bloomberg News

Big banks have benefited under Trump. Their employees give more to Biden.

Article by Neil Haggerty, Hannah Lang and Brendan Pedersen

Just days before the 2020 presidential election, former Vice President Joe Biden was outpacing President Trump in donations from the largest U.S. banks.

As of October that same year, employees at the eight U.S. global systemically important banks — JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Bank of New York Mellon, Citigroup, State Street and Wells Fargo — had given more than four times as much to Biden as to Trump, according to data from the Center for Responsive Politics.

Donations for Biden exceeded $3.4 million, versus just over $750,000 for Trump. The figures were based on individual contributions by those employed at the eight institutions.

The advantage in individual donations to Biden runs somewhat counter to the benefits the GSIBs have received during the Trump administration, including cost savings under Trump's Tax Cuts and Jobs Act and a friendlier regulatory environment.

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Luke Sharrett/Bloomberg

Bank regulatory actions under Trump fall to historic lows

Article by Kate Berry

By 2018, the issuance of financial regulations had dropped to a 40-year low, new data shows, a sign that the Trump administration was fulfilling its deregulatory agenda.

Companies that track financial regulations started to see a slight drop in the volume of regulations the prior year with a major drop-off in issuances and revisions in the first quarter.

Regulators were issuing or revising two to four items a week, a dramatic drop from the five to seven items a week, on average, that companies have had to comply with for years, according to Continuity. The new range is the lowest that the compliance management provider has found since tracking the issuance of regulations dating back to the 1970s.

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