The Next Administration: Implications for Financial Institutions

Regardless of the outcome of the presidential election, Congress will likely be closely divided, presenting challenges for lawmaking. The primary avenue to change financial services policy will be through regulation at the agency level, driven by the personnel appointed to serve in the new administration.

While Harris would likely inherit some Biden administration regulators serving out their terms, she would also seek out new faces to put her own stamp on rulemaking. Trump would likely continue to pull appointees in from the business community, including some from his first term.

Overview

Vice President Kamala Harris has centered her pitch to voters around a promise to create an “opportunity economy.” She often cites research from Goldman Sachs and Moody’s showing that job growth would be higher and inflation lower under her leadership. On financial regulation and fiscal policy, Harris is looking to deliver on these promises through stringent policing of bank mergers and capital levels, higher taxes on corporations and the wealthy, an increasingly aggressive consumer protections agenda, and a willingness to work with Wall Street. She has said her administration would “create a safe business environment with consistent and transparent rules of the road.”

Former President Donald Trump is campaigning on an economy characterized by a deregulation agenda, stiff tariffs and lower taxes. On financial services regulation, however, he is increasingly pulled in competing directions by the populist and more traditionally conservative wings of his party. Having long been personally and politically friendly to Wall Street, Trump embraced pro-business policies during his presidency that were largely applauded across the financial services industry. However, his running mate, Sen. JD Vance, and others in the party’s populist movement have left the former president contemplating aggressive antitrust positions and price controls on credit cards as avenues to protect American workers and families.

Banks

The regional banking crisis of spring 2023 continues to influence policy and opinion in Washington. Treasury Secretary Janet Yellen has acknowledged that market pressures could lead to consolidation in the sector, especially among mid-sized banks. Regulators including the Department of Justice, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) are working to update their frameworks for reviewing bank mergers to ensure that these combinations are friendly to competition and communities. Separately, in a win for Wall Street, the Federal Reserve recently announced significant downward revisions to its proposal around Basel III endgame that would increase bank capital requirements.

While Harris has kept a low profile relative to the current administration’s financial regulatory agenda, in her presidential campaign she has touted her role in securing a $20 billion mortgage relief settlement from big banks in the aftermath of the financial crisis. As a senator, she voted against the Economic Growth, Regulatory Relief, and Consumer Protection Act, which rolled back certain Dodd-Frank regulations. At the time, she pledged to “fight against any legislation to deregulate the Big Banks.” The financial regulators in place with Harris in the White House would look to finalize, if not strengthen, the Federal Reserve’s bank capital rules and support stricter bank merger review guidelines. She would continue to pursue aggressive consumer protections through regulations and enforcement actions led by the Consumer Financial Protection Bureau (CFPB). As a key piece of this effort, Harris has signaled that she will continue the battle against so-called “junk fees,” such as overdraft and late fees.

When Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act, he said that Dodd-Frank had “crush[ed] community banks and credit unions nationwide,” and that the new legislation would “liberate small banks from excessive bureaucracy… unleashing the economic potential of our people.” A second Trump administration is likely to ignore the Fed’s Basel III proposal or dispense with it entirely. Additionally, Trump’s position on M&A in the banking industry likely mirrors that of FDIC Vice Chairman Travis Hill, the only Republican currently serving on the FDIC, who has criticized the current administration’s rewrite of bank merger review guidance for introducing “a lot more unpredictability.” While the CFPB largely stood down during Trump’s first administration, his sway to populist or punitive proposals, such as his recent call to temporarily cap credit card interest rates, raises questions about the regulatory remit under a second Trump administration.

Digital Assets and Fintech

Broadly speaking, the candidates’ approach to opportunities in fintech – especially in digital assets – track with their perspectives on the role of regulation in banking and other financial services. Either administration will need to address major trends in fintech more broadly, including the proliferation of banking as a service business models and the industry’s push to allow payment companies direct access to Federal Reserve accounts and payment services.

Harris’s campaign has extended an olive branch to the crypto industry after the Biden administration cracked down on crypto firms for pushing the limits of traditional financial safeguards. She has still, however, highlighted the need to “protect consumers and investors” – though she provided no further details on what those protections might look like in her administration. While the Harris campaign has not advanced a broader point of view on the role of fintech in the finance and payments ecosystem, it is worth noting that bank charters plummeted during Biden’s presidency, and that Harris’s balancing act between innovation and consumer protection is likely to favor the latter over time.
Trump has promised to fire SEC Chairman Gary Gensler, appoint crypto-friendly regulators and create a stablecoin framework to make the United States the “crypto capital of the world.” For fintechs more broadly, these proposals – together with his previous administration’s embrace of fintech – signal that he is likely to develop policies or interpret laws to support fintechs' greater access to the banking system, and potentially loosen enforcement actions aimed at consumer protection.

Asset Management

While neither candidate has devoted much explicit attention to asset management issues or oversight in this election cycle, previous policies suggest their perspectives.

In August 2023, the SEC adopted new rules that sought to impose significant compliance and regulatory requirements on private funds, a cornerstone of Chairman Gary Gensler’s attempt to regulate the comparatively less-scrutinized private capital industry. In June 2024, however, the Fifth Circuit Court of Appeals struck down the rules. While neither Biden nor Harris commented on the rules – either when they were adopted by the SEC or when they were vacated by the court – the rules reflected an appetite among Democrat appointees to regulate more of the financial system, even well-funded corners that have long evaded scrutiny.

In a Trump administration, asset managers are likely to be scrutinized for different reasons, namely their use of ESG strategies and vehicles – an issue that has already driven significant regulatory action at the state level. During his term in office, Trump directed the Department of Labor (DOL) to review investment trends in the energy sector, as well as existing DOL guidance regarding the fiduciary responsibilities for proxy voting. Those reviews ultimately resulted in a DOL rule that made it harder for employers to offer ESG funds in employees’ 401(k) retirement plans. In February, Trump said in a Truth Social post that if elected to a second term he would reinstate that rule after the Biden administration walked it back.

You can download a copy of this note here.