The Politics of Finance: Trump vs. Clinton
Presidential hopefuls, Hillary Clinton and Donald Trump, offer up differing views on just about every economic policy, but perhaps the biggest dividing line between the two candidates, financially speaking, is Wall Street. Trump, the Republican nominee, wants to overhaul the 2010 Dodd-Frank financial regulatory law, while Clinton, his Democratic opponent, plans to extend its reach.
There are many uncertainties in the industry that will depend on the outcome of the election — including regulatory, competitive, and economic pressures. But how will each candidate’s potential presidency affect the financial industry? Here’s a look at how Clinton and Trump (listed in alphabetical order by last name) compare on Dodd-Frank and other regulatory policies.
Hillary Clinton
Clinton plans to extend the reach of Dodd-Frank to “reduce the risk of future crises,” and make the nation’s financial system more accountable and fair, according to her campaign website. “I want the law to extend to those that are part of the shadow banking industry — the big insurance companies, the hedge funds,” Clinton said during an April 14 Democratic debate.
The Democratic hopeful plans to impose a risk fee on the largest financial institutions, according to her website. The fee would be based on the institution’s size and their risk of contributing to another crisis.
Additionally, she plans to hold senior banks “accountable when a large bank suffers major losses,” by causing senior managers to lose some or all of their bonus compensation, according to her website, as well as strengthen and tighten the “Volcker Rule,” which bans banks from betting with deposits covered by taxpayer-funded insurance.
“While institutions have paid large fines, and in some cases admitted guilt, too often it has seemed that the human beings responsible get off with limited consequences—or none at all, even when they’ve already pocketed the gains. This is wrong, and on my watch, it will change,” Clinton said during her economic policy speech in July of last year.
Secretary Clinton has a “great deal of sensitivity to regulation,” Ryan Donovan, chief advocacy officer of Credit Union National Association (CUNA), said. Her policy indicates she is “open to regulatory relief for credit unions and banks,” he added. For example, Clinton would grant regulators more authority to force firms to downsize, reorganize, or break apart, if the firm is getting too big or too risky to be managed effectively, according to Clinton’s website. She plans to hold corporations and individuals on Wall Street accountable by enhancing whistleblower rewards, extending the statute of limitations for prosecuting major financial frauds, and providing the Securities and Exchange Commission and Department of Justice with more resources to prosecute wrongdoing.
However, every time regulation changes—whether it’s changed to reduce or increase regulation — “it adds a little, or in some case a lot, of compliance burden for credit unions,” CUNA’s Donovan said. For example, financial institutions and credit unions still have to go through the process of changing systems, implementing new rules, training staff, etc., he added.
One of the things that would concern us would be someone coming in and deciding by stroke of pen to go back seven years,” he said, because all the money the institutions spent in order to comply with the rules that were put in place previously “would be thrown out the window and undone.”
Overall, regardless of who is elected, there “needs to be a lot of care taken” when reducing regulatory burden, Donovan said. “It definitely needs to be a concerted and concentrated effort on the rules that cause the most burden,” and approached with the understanding that changing regulation could be costly.
Click over to Page 2 for Trump’s financial views.
