What bankers think about Trump, Harris and the election

October 10, 2024 6:00 AM

With just under a month left until Americans vote for the next president of the country, bankers are anxious to see who will pick the next crop of regulators and in what direction financial policy will head for the next four years.

The next president will have the opportunity to choose the policymakers who will steer banking regulation through the next Congress and beyond. The Consumer Financial Protection Bureau could shift direction should former President Donald Trump be reelected, back to an agency that's largely permissive of industry aims, and prudential banking regulators who might pass a more toned-down version of the Basel III endgame proposal.

A potential presidency of current Vice President Kamala Harris would likely represent the continuation of the goals and policies of the Biden administration.

To get a clue as to what bankers expect out of the election and what lies ahead, American Banker surveyed 191 readers on their thoughts about the presidential contest, candidates and other political issues.

The survey was conducted from Sept. 10 to Sept. 27 and carries a 7 percentage point margin of error.

Here's some of the top takeaways from the survey's results.

Bankers back Trump but more undecided than in 2020

More American Banker readers plan to vote for Trump than Harris in the 2024 presidential election, yet not as many as had expressed a preference for the Republican candidate four years ago.

Forty-four percent said they would back the Republican candidate this year, compared with 38% who said they would vote for the Democratic candidate, Vice President Kamala Harris.

Nine percent said they were still undecided, while 7% said they preferred not to say.

That's a much smaller margin than the previous election. More than half, 56%, of readers in a 2020 survey said they would vote for Trump, while 37% said they would vote for now-President Joe Biden.

A smaller share, 3%, in that survey said they were still undecided, while only 3% said they preferred not to say.

That survey, taken at a similar time in the 2020 presidential election cycle, included 187 American Banker readers.

But they think Harris will win

Although they would prefer a Republican candidate, more than half of American Banker's poll respondents, 59%, expect the Democratic one will win the presidency.

Most of that gap is driven by answers among those who work for large national banks, with more than $100 billion in assets. Of those, 61% said the Democrat, who this year is Harris, would win the White House, compared with 39% who said the same of the Republican candidate, who is Trump.

Those who worked for community banks, meanwhile, were split. An even 50% said the Republican would win the presidency, while the remaining 50% said the Democrat would.

That's also a big shift from what banking readers said in 2020. Fifty-six percent said Trump would win reelection, compared with 37% who said Biden would win.

On other important races, views among American Banker readers were less clear.

Fifty-two percent thought that Republicans would flip the Senate, compared with 48% who thought Democrats would hold onto the upper chamber. Those figures fall within the 7 percentage point margin of error.

The Senate is narrowly split, with 51 Democratic votes (including three independents) and 49 Republicans. There are three vulnerable Democrats running for reelection this year, including two Senate Banking Committee members: the panel's chair, Sen. Sherrod Brown, D-Ohio, and Sen. Jon Tester, D-Mont.

The Senate races are particularly important for bankers to watch. Control of the upper chamber determines which regulators will be confirmed, a key ingredient for any administration changing the oversight of banks.

Harris: More liberal than Biden?

The banking industry, as represented by American Banker's readership, largely anticipates that Harris' financial policies would be more liberal than Biden's.

After Biden exited the 2024 presidential race and Harris stepped in, the campaign has offered few clues as to how much Harris would stick to the financial policy priorities, such tackling so-called junk fees and finalizing higher capital rules via the Basel III endgame proposal.

Fifty-five percent of the poll respondents believe Harris will pursue more liberal financial policies than Biden, with 32% predicting her policies will be "significantly more liberal" and 23% expecting them to be "somewhat more liberal." On the other hand, only 13% expect Harris to be more conservative than Biden, and none anticipate her policies to be "significantly more conservative." A notable 29% think her policies will be "about the same" as Biden's, while 3% remain uncertain.

While Harris has done little to address her financial policy priorities for her term, analysts largely expect her to carry on with Biden's previous plans. She has a tough previous record with Wall Street banks in California but has done little on the national stage during her time in the U.S. Senate.

That said, Harris' other economic policies might suggest that she would take a slightly more lax approach to financial policy, bucking the idea that she might be more liberal.

She has outlined what she calls an "opportunity economy" that's heavy on kitchen table issues like child care and small business formation, but has tempered some of the Biden administration's more liberal agenda items, such as proposing a lower rate than Biden for corporations to pay in taxes when the Trump tax cuts expire next year.

When American Banker respondents were asked to describe how the shift of the Democratic candidate, from Biden to Harris, changed their expectations for how a Democratic White House would affect their industry, some expressed concern that Harris would be more liberal.

"Kamala Harris is somewhat of an enigma since she has apparently disavowed some of her major beliefs from her 2020 run. When she ran in 2020, she was one of the more left-leaning candidates … I would think she almost certainly still harbors many of those same views and that would suggest more of what we've seen over the past four years including the current administration's war on 'Junk Fees' and, what I believe are, misguided views of banking and private market in general. We not only see more regulations when Democrats are in office, but we also see more aggressive enforcement," a millennial staffer wrote.

"I believe that Harris is much more liberal than Biden (if that's possible), and has virtually no experience that makes her qualified for the presidency. I am deeply concerned that if she gets elected that our economy will falter further, foreign relations will suffer and crime will spiral out of control across the country," a Generation X executive wrote.

Others thought Harris would have a larger impact than Biden on regulatory matters.

"It seems to be the case that Harris and Biden share many of the same stances on policy issues. Harris also seems to be more heavily focused on scrutinizing anticompetitive practices from big corporations, which is important, but could have drastic effects on the banking industry," a Gen Z staffer wrote.

"VP Harris seems to see herself as a rule-maker who believes government should have a larger presence in all industry. Consumer protection is important, but not unlike most progressive Democrats, she espouses laws that pick winners and losers according to the progressive vision, not according to achievement, effort, or ability," a baby boomer staffer wrote.

Some were positive on what Harris could bring to the table.

"Since Harris is actively touting solutions via pushing affordable housing and small business things would go better for us under Harris," a baby boomer manager wrote.

"Harris improves our industry's chances, as she does for the rest of this country. The economic boom we saw under Trump was a temporary and unsustainable farce," another millennial staffer wrote.

"Harris seems more open to curbs on regulatory authority, meaning more business is likely to get done instead of just litigation over rules," a Gen X staffer wrote.

Fed rate cut likely helped Harris

The Federal Reserve cut its benchmark interest rate in September by 50 basis points, ending its post-pandemic tightening cycle and setting the country on the course to grow economically over the next few months.

The timing of the rate cut was fortuitous for Democrats, although Fed Chairman Jerome Powell has repeatedly said the central bank doesn't consider the timing of elections or other political events in its decision-making process.

Trump has accused the Fed of making a "political move" by cutting rates in September, despite the fact that many Republicans urged the Fed to cut rates earlier in the year.

American Banker's readers largely agreed that the Fed's move helped Democrats in the presidential election. A net 50% said the rate cut gave Harris an advantage, while just 7% said the same of Trump.

They were also more likely to agree with Trump that the Fed is influenced by politics when making policy decisions. A net 77% said the Fed takes into account political considerations when setting monetary policy, including 16% who said the central bank "always" does so, 18% who said "most of the time" and 43% who said "some of the time."

Only 19% said the Fed never does so and 4% didn't know or had no opinion.

But Trump could worsen the Fed independence problem

Although the bankers surveyed thought that the rate cut helped Harris, and that the Fed sometimes takes into account politics when making decisions, they're more worried about Trump's impact on Fed independence overall.

Trump has said he would seek a greater role in the Fed's decision making.

"I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than in many cases, people that would be on the Federal Reserve or the chairman," he told reporters in August near his Florida home.

The Wall Street Journal reported that some Trump allies have drafted a 10-page document outlining plans for Fed reform, including a demand that the president be consulted on interest rate decisions, subjecting Fed regulations to White House review and using the Treasury Department to counterbalance the central bank.

Just under half of respondents in the banking sector, 46%, expect the Fed to become less independent under a second Trump presidency, with 29% predicting a "much less independent" outcome and 17% expecting "somewhat less independent." Meanwhile, 21% believe the Fed would become more independent under Trump, and 23% foresee no change.

Under Harris, a much smaller portion, 31%, anticipate a decline in Fed independence, while 10% predict it would become more independent. The majority, 50%, believe Harris' leadership would not affect the Fed's autonomy.