Thursday, November 5, 2020
Votes are nonetheless being counted as this text goes to press, however sufficient has been determined that sure observations are doable.
First, although there’s controversy, it seems that Joe Biden shall be declared the winner. It might be messy, however this seems to be what would be the finish consequence.
Second, it seems Republicans will retain a majority within the Senate. They picked up a present Democratic Senate seat in Alabama, whereas dropping Republican Senate seats in Colorado and Arizona. As of this writing, North Carolina is shut, although the incumbent Republican Senator Thom Tillis has a lead and has declared victory. So, it now seems that Republicans have picked up one previously Democratic seat to offset the lack of two or three seats relying on the end result in North Carolina. Whatever the final final result in North Carolina, nevertheless, Republicans may have a minimal of 51 seats.
Thus, Republicans are set to carry a majority within the Senate subsequent yr. All that is assuming that each of the Georgia Senate seats stay in Republican arms, which election numbers point out would be the case although a runoff must verify this. Georgia will maintain a runoff election proper after the primary of the yr.
As has typically occurred, the American folks have once more seemingly declared that they don’t need both social gathering to have complete management of the federal authorities. As a normal rule, until extremely dissatisfied as they had been in 2016, the voters desire checks and balances. This election additionally reveals simply how politically divided this nation has develop into.
For our current functions, we’ll assume a Biden win with a Republican majority within the Senate. What then does this portend for banks?
To start with, the brand new administration will make dramatic adjustments within the regulatory businesses. For instance, the left wing of the Democratic Social gathering will push arduous to have a brand new Shopper Monetary Safety Bureau (CFPB) director named. This might make a serious distinction in enforcement insurance policies on the Bureau, in addition to in its promulgation of laws. Presently, for instance, the CFPB is drafting proposed laws to implement Part 1071 of the Dodd-Frank Act, which mandates that lenders acquire and preserve info on the race, gender, and ethnicity of small-business borrower candidates and the results of the lending request. The present define the CFPB has launched relating to its strategy to this course of signifies they could present asset-size exemptions, which may eradicate the burden on small banks. A brand new director may properly alter this strategy to exemptions. The activist group has already signaled that it desires the broadest software doable of Part 1071.
Adjustments in management may even be made on the financial institution regulatory businesses. A brand new comptroller can be within the offing. Once more, the activist group and its champions, equivalent to Senator Elizabeth Warren, will push activists for these positions.
Talking of Senator Warren, she is making a concerted bid to be named Secretary of the Treasury. Whereas Wall Road gave closely to the Biden marketing campaign and would oppose such an appointment, Warren’s allies may need the political clout to acquire the nomination for her. The affirmation course of may show problematic, nevertheless. Equally, there’s an effort to have Senator Bernie Sanders named Secretary of Labor.
By way of Congress, the election will transfer the Senate Banking Committee barely to the left. Senator Doug Jones was a swing Democrat on that committee, together with Senator Jon Tester. He shall be changed, in all probability, by a extra party-line Democrat who will observe the lead of the rating Democrat on the committee, Senator Sherrod Brown of Ohio.
Senator Pat Toomey will step as much as chair the Senate Banking Committee, changing Senator Mike Crapo. Senator Crapo is a considerate conservative chairman, however Senator Toomey is far more an activist by nature. The committee has not too long ago performed little or no. That is prone to change with Senator Toomey.
On particular laws, the lame-duck session is unlikely to provide main breakthroughs. There’s nonetheless an opportunity that the SAFE Banking Act shall be connected to one thing. Its lead champion within the Home, Congressman Ed Perlmutter, sits on the Home Guidelines Committee and has stated privately that he intends to connect it to one thing going to the Home flooring. Within the Senate, the invoice is dropping its main champion, Senator Cory Gardner, who was defeated in Colorado. Whereas the laws includes banking for marijuana companies, which Senator Mitch McConnell doesn’t favor, it additionally addresses the issues going through hemp growers and companies. Hemp may develop into a serious crop within the South. Senator McConnell is a powerful advocate of the hemp business. So, I imagine it may nonetheless be enacted this yr.
On points like Financial institution Secrecy Act/Anti-Cash Laundering (BSA/AML) reform, the brand new administration is prone to be an impediment. Biden is usually a hard-liner in such areas. He’ll doubtless again up the Monetary Crimes Enforcement Community (FinCEN) in its opposition to main adjustments.
On the tax entrance, the brand new administration will try and roll again the Trump tax cuts. The Senate will doubtless block such an effort. However, a serious infrastructure invoice is prone to be enacted. Additionally, I believe reduction for rural hospitals is feasible because it may reduce throughout social gathering strains.
So, on steadiness, banks are going through much less of a political problem now than gave the impression to be the case going into the election. Had the Democrats taken a majority within the Senate, the sensible cash assumed that they might abolish the filibuster which may have introduced actual challenges as Chairman Maxine Waters despatched over a slew of payments. However with the 2 chambers of Congress in several arms, it seems that continued gridlock is in our forecast.