By Steve Viuker
The race for the White House that has captivated some and disgusted others now appears
to be narrowing down to Hillary Clinton versus Donald Trump.
Clinton seems to be a lock for the Democrat party nomination and Trump will be trying to “Cruz” to his nomination with the GOP un-faithful. With wins in the New York primary and the recent concession from Ted Cruz, it appears more likely it will be the two brash New Yorkers – Hillary and Donald – battling to see who ends up with the Trump card.
But wait! “Bernie Sanders is not going away,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at Brookings and former reporter at The Wall Street Journal. “If he isn’t president, he will still be in the Senate. It is not so much what he is saying, but why it is striking a chord. We are seeing the continuing impact of the financial crisis. Many Americans believe Wall Street got bailed out and Main Street didn’t.”
“Yes. The scars of the 2008 crisis have not healed,” said Aaron Klein, director of the Financial Regulatory Reform Initiative at the Bipartisan Policy Center. “‘Income’ and ‘inequality’ are words used frequently, and whether people have had a fair chance to get ahead. Even one of the Koch brothers had an op-ed agreeing with Sanders that the system is rigged [against] the average person.”
Explained Justin Schardin, associate director of the Bipartisan Policy Center, “Clinton’s plans call for continuity with the current administration. Her plan is to continue what has been implanted in Dodd-Frank. Trump has echoed the populist, anti-Wall Street sentiment. He believes that regulators are running the banks. Trump also has more experience with the financial industry than the other candidates. He comes at this from the view of a large borrower.”
What would a President Donald Trump do to Wall Street and to banks? According to Brian Caplen, editor of the London-based The Banker, the United States would become more isolationist.
In a column for The Banker, Caplen said bankers might be excited because Trump has talked about his concerns over the Dodd-Frank Act. “The risk for the banks is that as Mr. Trump’s policies started to fail, the banks could become the scapegoat,” explained Caplen. “Attacking banks is an easy win for politicians of all suits and Trump has shown his skill in turning on critics and heaping abuse on his opponents. Blaming the banks for a failing economy is an approach as old as capitalism and too tempting to turn down.”
Recently, Politico Chief Economic Correspondent Ben White interviewed Mohamed A. El-Erian, chief economic advisor, Allianz, and chair of President Barack Obama’s Global Development Council, at Nasdaq’s MarketSite in Times Square. When asked about the comments from Trump, El-Erian said, “When you hit a period of low growth, the easiest target is foreigners. But I don’t see a major move towards protectionism. We will see a greater emphasis not on free trade, but on fair trade. This is a term that we will hear no matter who wins the election.”
El-Erian talked about the anti-EU sentiment in Great Britain and compared it to the United States. “Even if an anti-establishment movement doesn’t gain power, it can influence how a country is governed. We are seeing it in the United States and have been since the Tea Party. It is the result of growth that has lagged and income inequality that is getting worse.”
But does it really matter who comes out on top?
“Banks don’t care which candidate wins,” said Nomi Prims, author of All the Presidents’ Bankers. “Trump, though he downplays ties, would not have become Trump without banking relationships at elite levels on the financing side for his deals. And Hillary Clinton has never actually championed legislation that would fundamentally alter the structure of Wall Street, or how it imposes risk on the general economy.”
And there are those who have trouble with both Sanders and Clinton. Said Brenda Wenning of Wenning Investments: “The economic issues the two Democrats take on amount to a choice between socialism and near socialism. Ms. Clinton has promised to create ‘the economy of tomorrow,’ which is a pretty scary place. Bernie Sanders at least seems honest about his beliefs.”
“Being a socialist is cool if you’re a college student or professor. It’s not cool if you’re in charge of the world’s largest economy. Sanders’ plan would create a huge disincentive for creating wealth and would not create anywhere near enough revenue to pay for his social programs,” she said.
Concluded Caplen: If, as expected, the next U.S. presidential election is a contest between Trump and Clinton, “the smart thing for the banks to do will be to drop their usual Republican allegiance and support the Democrats. Clinton has promised more regulation of banking and markets, but after six or seven long years of regulation, this is just business as usual. At least she would have a credible economic policy and would keep the U.S. open for business.” ■