What banks should take away from this week's whirlwind political drama

July 18, 2024 9:30 PM

The Republican National Convention this week ushered in Republican vice presidential nominee J.D. Vance to the ticket, offering a more outwardly populist attitude toward large corporations — including banks — than has traditionally prevailed in Republican politics.

WASHINGTON — The 2024 election turned on its head this week, as a galvanized former President Donald Trump, bandaged ear from a failed assassination attempt, officially accepted the Republican nomination for the presidency.

President Joe Biden, meanwhile, retreated into his Rehoboth beach, Del., home on Thursday, isolating with a recent Covid diagnosis as political pressure mounted for him to step aside amid concerns from his own party about his mental and physical ability to withstand another four years of political service.

The dramatic events of the week bolstered the Republican ticket, where Trump is now joined by Sen. JD Vance, R-Ohio, giving further answers as to what the policies of the future Republican party will look like, even after Trump. The Democratic party, meanwhile, tried to regain momentum, framing the Trump campaign's aims as detrimental to most American voters, particularly on economic issues.

Here's four takeaways from the week and what it bankers should glean from it:

Kamala Harris battles as Biden teeters

Democrats, both publicly and privately, have been urging President Joe Biden in recent days to consider how his paths to victory in November have diminished.

Should Biden drop out of the presidential race — which, although it's far from assured, is looking increasingly likely — the most likely choice to replace him is Vice President Kamala Harris. That is for several reasons, not least of which is that Harris, unlike other potential replacements, has a straightforward path to gaining control of the war chest the Biden campaign has amassed over months.

In a campaign speech in North Carolina on Thursday, Harris sought to set Democratic policies apart from Republican ones, especially on economic issues like inflation.

In contrast with Trump's tax policies on tariffs that, Harris said, raised expenses on everyday expenses, the Biden administration has "taken on big pharma, the big banks and big corporations to bring down costs."

J.D. Vance and the future of the Republican party

Former President Donald Trump named Sen. J.D. Vance, the junior senator from Ohio, as his running mate on the Republican ticket. Vance represents a growing contingent of the Republican party whose rhetoric suggests that he's more skeptical of corporate power than his predecessors.

He's even floated legislation during his time on the Senate Banking Committee that suggests he has an interest in reshaping how the party looks at banking, in particular. He's also been particularly vocal about housing and sharply critical of corporations who own housing rentals.

In his campaign speech, Vance referenced some of these themes.

"The absurd cost of housing is the result of so many failures," Vance said. "And it reveals so much about what's broken in Washington. I can tell you exactly how it happened. Wall Street barons crashed the economy and American builders went out of business."

While the speech didn't mention banks specifically, Vance talked a lot about trade, promoting an "America First" economic vision.

"President Trump's vision is so simple and yet so powerful," Vance said. "We're done, ladies and gentlemen, catering to Wall Street. We'll commit to the working man."

GOP embraces crypto

The Republican National Committee officially added a crypto plank to its platform, and tech giants like Elon Musk swarmed to defend Trump after his hectic weekend.

Trump, although he derided bitcoin during his time in office, has made an about-face on the issue this election cycle. The official Republican platform now says that the party will "defend the right to mine bitcoin, and ensure every American has the right to self-custody of their digital assets."

The shift comes as the crypto industry has donated heavily this election cycle — mostly to Republicans and the Trump campaign, but to some Democrats as well.

Trump, according to an invitation released on Thursday, is holding a fundraising dinner before he speaks at a bitcoin conference in Nashville later this month at a price of $844,600 per head.

Taxes reign supreme for Wall Street interests

Despite the populist rhetoric, privately, the Trump campaign has continued to tell major Wall Street donors that he's the best choice to counter potential higher taxes under another Democrat-held White House.

As the Trump tax changes enacted in 2017 — Trump's signature first-term legislative achievement — expire next year, whoever wins the 2024 elections will need to figure out ways to offset revenue. The Biden campaign has pitched higher taxes on corporations and the ultra-wealthy, including proposals that would disproportionately affect banks, like taxes on stock buybacks.

The Trump administration, meanwhile, has floated higher tariffs, while extending the expiring provisions. Trump is also looking at lowering the 21% corporate tax rate, and suspending payroll taxes that businesses pay to Social Security and Medicare.