Many bankers and other financial professionals expected that a second Donald Trump term would be good for business, but why? Before election day, our audiences gave us valuable insights into what a Trump or Harris victory would mean for them in the workplace and at home. Join Janet King, Arizent's Vice President of Research and Content Solutions, and Daniel Wolfe, American Banker Content Director for payments, as they take a deep dive into the data and analysis.
Transcription:
Daniel Wolfe (00:09):
Welcome everybody to a very special edition of Leaders. We are going over Horizons predictions for the election based on a survey of readers of American Banker, and we conducted the survey with all of our brands and to see what bankers in particular today got right and wrong about the election when we asked them before we knew the outcome. So with me today is Janet King, vice President of Research and Content Solutions. I'm Daniel Wolfe with the American Banker. Janet Horizon is the company that publishes American Banker. So we're colleagues. Janet, how are you today? I'm
Janet King (00:43):
Good. I'm excited to be here to talk about this with you.
Daniel Wolfe (00:47):
Alright, so why don't you walk us through just what some of the predictions are and then as we go along we can get into the details, compare it to our reporting, and see how things are playing out a week after the election and what other predictions came through our reporting as well that inform what bankers were thinking about as they took this survey.
Janet King (01:06):
That sounds great. And just to remind everybody too, if you have questions for Daniel or I drop them into the q and a and we'll try to take them throughout today's discussion.
Daniel Wolfe (01:17):
Oh, absolutely. Don't wait till the end.
Janet King (01:19):
Don't wait till the end. Hit us all the way through. So as Daniel mentioned, I work for American Banker and every year we conduct a number of original research efforts for American Banker to really help us understand how bankers are feeling about the issues that are impacting their institutions and the industry at large. And the topics generally are pretty wide ranging and aligned with key areas of focus for our editorial team. So as Daniel mentioned, this year we conducted several surveys to capture sentiment regarding the election and the data we're going to be sharing today is from the survey that we conducted in September. So we actually were in the field collecting opinions between September 10th and September 27th and we had roughly 200 professionals from across the banking sector participate in the research and it was really a mix of men and women from all regions of the us. So it was a good demographic distribution. We had folks in different age groups and we also had a really good mix of registered Democrats, republicans, and independents. So feel good that we have at least a pretty diverse sampling base to start with for today's conversation.
Daniel Wolfe (02:37):
Absolutely.
Janet King (02:37):
So some of the things we talked about, right, some of the data we collected, we first wanted to understand how people felt or what they felt would be the best possible outcome to the election for their bank or their industry overall. And what you see here is that there's a real focus on, or a real belief that it would be best for the banking industry if there was a Republican sweep of the White House, the Senate and the House. That sentiment pretty much held true Daniel, when we asked them as well, what do you feel would be the best possible outcome for the banking industry and for your institution regarding regulatory and policy matters only? So overall, they felt like it would be best if the Republicans took the White House, the Senate, and the House. And then those numbers went up quite a bit actually when we asked about regulation.
(03:37):
So even more people felt that a Republican driven agenda would be more favorable for regulatory and policy matters. But interestingly, when we ask them what do you think will actually be the most likely outcome of the election, more people felt that there would be a Harris win for the presidency, but still that the Republicans would probably take the Senate and the House. So it's pretty interesting. Obviously we had the opposite outcome. We ended up with President-elect Trump and the White House and a Senate majority. And the house is maybe still being decided but looking like it's going to lean towards the Republican party.
Daniel Wolfe (04:23):
So that's one that the bankers got wrong in terms of their prediction.
Janet King (04:27):
All right, cool.
Daniel Wolfe (04:28):
So what have you got next? Yeah,
Janet King (04:29):
And it's interesting. I mean I didn't have a crystal ball for that, but if I had, in my own personal opinion, if I had to guess how that was going to come out, I knew it was going to be really close, but I thought it might be likely that you'd see Harris getting the popular vote, maybe Trump winning the electoral college. So interesting that it was a sweep in both places,
Daniel Wolfe (04:48):
Right? Since as a lot of coverage is noted, the Republican president has not received the popular vote win since GW Bush 20 years ago. So it makes sense why people would be leaning that way, but also banks are spread out across the country. This prediction might be informed by which signs they see on the lawns on their way to their own branch or community bank or what have you. And that might tip the scales in their minds one way or the other.
Janet King (05:16):
Absolutely. Okay, so another data point that we collected was how they felt a Trump presidency would impact their industry. Did they think it would be a positive impact, a negative impact, or somewhere in the middle? And what you can see here is that more than half expect that Trump President-elect Trump will have a positive impact on the banking industry. And you had about maybe a third that feel like it will be more of a negative impact.
Daniel Wolfe (05:55):
And the next data that we're going to get to is going to drill down into what exactly bankers cared about most going into this election.
Janet King (06:03):
Absolutely. And with that, we actually have a polling question. So we want some audience participation here. And we'd like you guys to think about thinking about your organization's business interest. Which of the following policy areas do you think are most urgent for the next administration and Congress to address? So select your top one. Is it affordable housing? Is it immigration, national debt? Is it the geopolitical conflicts, the economy, tax reform, industry regulation or cybersecurity? So we're giving you eight topics and just go ahead and pick the one that you think would be top of mind for this next administration to address. And then we'll take a look and see how it comes in.
Daniel Wolfe (06:48):
And while you're voting, I'll just say that each of these God votes in our survey. So each of these topics were important to varying degrees to the bankers who read us. And it's interesting because it plays out in a lot of different ways in the reporting, which we'll get to as well as to why these issues are important. Now, some regulation, we'll get into details, but that one's not a surprise. Wars and global conflicts, that one might not be quite as obvious depending on what aspect of the banking industry you work in. But we get into that and why that matters and what we saw with Russia and Ukraine in the previous Trump administration and Biden administration and going forward as well.
Janet King (07:30):
Let's see what people are saying. So what we're seeing in the results is the economy is coming up, well, I guess industry regulation and compliance is number one. About a third of the folks attending have mentioned that then the economy at 25% followed by affordable housing. So those were kind of the top three issues that are resonating with this group today. Now granted, we know the outcome of the election, so it's not exactly comparing apples to apples, but if you take a look at the data and how it played out, it's not unsimilar, right? So it's not dissimilar. So we see the economy at 60% of the people that we surveyed was the number one issue. Then regulatory and compliance burdens followed by national debt. Those were kind of in the top three. And then you sort of see the next five kind of grouped together with roughly one in four bankers talking about immigration, the wars and potential conflicts, affordable housing, cybersecurity and tax reform. So maybe we can go through this one by one, Daniel, but I'm kind of curious how you're seeing play out.
Daniel Wolfe (08:41):
Oh yeah. And I can see why some of these shifted as well with the economy. We have the stock market rally, which we'll get into at a later point in this discussion. So maybe that is playing out and people today in our audience might have that might have been more concerned about that before seeing that news versus after. But we'll start with the economy. And of course that's a broad topic and it's one where you can look to the past, but you also don't necessarily need to look to the past because things aren't necessarily going to play out the same way they did before. This is Trump's second term, he can't run again. So all the issues that politicians face when they're thinking, okay, about my second term, about what I'm going to do next time, that doesn't necessarily weigh in as much. And plus with Trump, we also saw a large amount of turnover in his inner circle as well.
(09:30):
And I think people who are putting themselves close to Trump this time around are probably going to be more aligned with him and probably understand we're not going to have another scaramucci situation, we're probably going to have people who understand what it is they're signing up for and who are already close to Trump as well. We're already seeing many of those appointments play out as well in the past few days. So for anybody who reads American Banker, I would draw your attention to a column that my colleague John Helman, the Washington Bureau chief wrote and published yesterday, looking at what exactly is Trump's mandate this time around. So he wants to, and this is in John's words here, to bring back the economy he oversaw between 2017 and early 2020 record markets, low inflation, less metal, some regulation, more money in people's pockets. Many of these ideas fit together if you lower banks' compliance costs that leaves more profits to be shared with investors boosting share value, juicing the market, which makes investments more valuable and creates at least the appearance according to John of more money in their pockets so long as inflation remains in check.
(10:38):
Now that said, there's also some other issues that he's facing that may be in conflict with this, and we'll talk repeatedly about which Trump policies may be working against one another as well. In this case, it could be the deportation, the mass deportation of illegal immigrants. The sudden and permanent disappearance of millions of people who lived eight spent money here would reduce the labor market that would have consequences on the local level reducing, excuse me, economic growth by 0.4% in 2025 according to the American Enterprise Institute. Also on the topic of regulation, I don't know how many people watch our leader sessions multiple days in a row, but yesterday on our sister publication National Mortgage News, the editor in chief, Heidi Pano had a very interesting conversation with Mark McArdle, the assistant director of mortgage markets for the CFPB. And one of the audience questions a nice brave question to ask, what happens if the CFPB gets eliminated?
(11:35):
Interesting question about regulation, and he had a very interesting answer as well. His answer was that you don't need to necessarily eliminate an agency if you don't agree with how it enforces things. We've had personnel changes in the past. The people who work there are generally supportive of whoever is in charge and implementing that person's agenda. The goal is to protect public servants. And of course all banks will want to adhere to regulations to the extent that they're applied to them. And you need, in his words, a cop on the beat. So in that case, that would be the CFPB. So the continuance or the elimination of the CFPB, those aren't the only options.
(12:20):
There's also questions of other agencies. Trump has the ability to replace the leaders of the office of the control comptroller of the currency, the CFPB as we discussed the Federal Reserve's capital plan, Basel three endgame, it's probably going to be postponed at best initially for those who don't know what that is. Initially proposed in 2023, sought to raise capital requirements for banks to more than a hundred million billion, excuse me, in assets by 16%. The spark pushback from the banking industry as a result and an extended comment period, fed vice chair Michael Barr introduced a softer re proposal in late 2024. Revised framework lowered the capital requirements to increase to 9%. And so that may change, that may get postponed. The final thing that I'll say under, oh actually you know what I realized that I've just kind of segued into regulation and compliance, which is the next one on that list list without even realizing it.
(13:14):
So let's pretend I had some kind of segue there. So the final thing under regulation, excuse me, is m and a. Now we've seen anybody who's ever owned a cell phone knows that we had a lot more cell phone providers when this industry began by now. And of course, bank consolidation is a constant topic of interest for our readers. And the one thing that really kind of made headlines during the stock market rally that followed the Trump victory is Capital One Financial and discover. And whether the Trump victory would remove barriers to the approval of that. And while that does seem to be the view of the stock market, this is one of those cases where Trump's other, and not necessarily in the case of Capital One and discover where Trump's other projects may get in the way of that. We saw in his first term that just because two companies want to consolidate doesn't necessarily mean his administration will prove that. The big example being Ant Group, which is based out of China in its mission to buy Money Gram, which it backed off of facing pressure from the administration. Now that was a case of Trump's America first policies and administration wanting to basically make sure that the US had control over a major money movement company. And so that's a case where you see the two policies kind of in conflict. I'm going to pause to breathe for a second there. Any questions or thoughts, Janet, before I move on?
Janet King (14:45):
I don't see any questions yet from the audience, but no, I think it was interesting you mentioned the potential of some of the strategies around immigration on the economy. What other thoughts do you have specific to immigration and how are we seeing our reporting or other stories play out around that topic since the election results were announced?
Daniel Wolfe (15:09):
Okay, so we're skipping over national debt, then we'll come back to that immigration.
Janet King (15:15):
Yeah, yeah,
Daniel Wolfe (15:15):
We'll come back to that. Okay, that's not going anywhere. So immigration, I think one of the biggest cases where that was discussed in the election was during the vice presidential debate for those of us watched you had waltz, the candidate for vice president under Harris. I'm sorry, I got a little distracted. I saw a question come in. So we'll come to you in a moment, Heidi. But he was talking about housing and what are the concerns around that. And that was the corporate landlords, as he called it, buying, renting out homes by the dozens at high prices that people cannot afford. Vance,
(15:54):
The vice president elect, JD Vance, he discussed housing as a consequence of immigration policy. In his words, you got housing that's totally unaffordable because we brought in millions of illegal immigrants to compete with Americans. Now that's one factor of it, but we can also look back to other, the first Trump term to see how immigration informed his policies there. There was of course the border wall and one thing that touched on the payments industry, there was remittances. Now immigrants when they come to our country, they want to send money back home typically. So remittances is an absolutely huge business that, especially along the US Mexico corridor was a target for Trump because he wanted to use that as a bargaining chip to get Mexico to pay for the border wall. That didn't actually play out that way, but that was a case where it was part of the rhetoric.
(16:45):
Now in terms of restrictions on visas, we've covered fintechs that wanted to bring people over from overseas to bring knowledge to the us, to their companies, their local teams here to TI was a payments company that spoke to us in 2020 about being unable to bring an operations executive to San Mateo because of the visa restrictions. So that's something that also plays out in terms of how these policies affect companies based in the US as well. And finally, immigration can be a business opportunity. We've written recently about New York's migrant prepaid card, the pilot program which distributes funds through, of course a prepaid card is estimated to cost 53 million but will save more than 7 million per year based on reductions in delivery expenses. So that's just a roundup of some of our coverage on immigration and how trump's past policies and current predictions may affect that market.
Janet King (17:48):
It's going to be an interesting to watch and see how it plays out.
Daniel Wolfe (17:51):
Okay, and Heidi sent a, this is not so much a question, but a comment, and I did actually before this, because again, I don't really like reading off cue cards, but as you can tell, I am kind of reading some of our reporting verbatim because I did not report every single story that we've ever written about Trump or the economy or regulation or what have you. And I did ask my colleagues to watch and weigh in and provide context. And Heidi generously says on the immigration front, some are concerned that more stringent policies will create a labor shortage in home building. Heidi Padano being the editor in chief of National Mortgage News. So thank you for the context. Heidi, what do you want to go to next? Janet,
Janet King (18:28):
Do you want to go back to national debt?
Daniel Wolfe (18:30):
Sure. I don't have as much to say here. Kyle Campbell, who's one of our reporters on the regulation beat, he wrote about predictions for the national debt. The committee for a responsible federal budget and nonprofit organization that tracks and analyzes fiscal policies projected that Harris's proposals would increase the nation's $35.4 trillion debt by 3.5 trillion during the next decade while Trump's plans would grow it by 7.5 trillion. And that Jerome Powell, the Fed chair, had repeatedly warned that the country is on a unsustainable fiscal path because of how fast the debt is growing faster than the overall economy. And the reason for Trump being more exaggerated here would be the tariff proposals, which could lead to a spike in prices and such. So that does dovetail into the question of Fed independence, but also it's not easy to just attribute it to one person or another because if things had played out as how bankers had predicted with Harris winning the White House, but neither the House or the Senate, then she wouldn't have to support to put her policies in place necessarily. And that would probably weigh on whatever prediction we had for a Harris presidency.
Janet King (19:46):
Yeah, absolutely. Are there other things that you mentioned fed independence, are there other topics here that you'd like to explore further or do you want to move on to the topic of fed independence?
Daniel Wolfe (19:56):
I found it interesting that people were concerned about war and global conflict. And I did, I realize we're limited time, so I'll be brief here, but looking back at Russia in 2022, the international response was it affected all types of companies, McDonald's, Pepsi, shell, dozens of financial institutions, payment providers were pulling out of Russia and there were sanctions. The goal was to isolate Russia from the international payment system and that in turn led Russia to prop up its own its mere credit card system, its version of the Swift International Payment Messaging System. And additionally to that we did a lot of John Adams, my colleague on the payment speed at American Banker in did a lot of discussion about, he spoke to folks in Ukraine back then and more recently in Israel as well with more recent conflict because these are areas where there are FinTech communities and banking communities and there are communities where local banks and credit unions have connections.
(21:05):
So a lot of times you will see a direct impact to the companies that have some kind of international reach or employee base and the disruption that you see there. So I understand why that would be of concern to the folks who read us at American Banker, despite the word American being in the name, it's truly a global economy and industry. I also wanted to discuss cybersecurity because AI was a big one here. And I've brought up anybody who's seen me speak on anything recently knows that I like to bring up the example of Taylor Swift and her endorsement of Harris because it wasn't just notable because of Taylor Swift and her poll on her fan base as potential voters, but also because she specifically said, I am speaking out because of ai, because there was a fake AI endorsement of Trump done in her image and she had the power in the platform to set the records straight.
(22:00):
Now, banks care a lot about AI and the impact of AI on cybersecurity, anything that fraudsters do they want to do at scale. So AI helps them reach more people, responds to more vulnerable people and enact more scams. It also helps banks spot scams better because again, helps increase the scale. If you're looking at a greater number of transactions and looking at more data, then AI can help digest that. So there are policy implications if we add more time, I could get into what Elon Musk's presence in the administration means for this. But in a nutshell, Biden did have an AI executive order in October, 2023 that is expected to be repealed. It was a more kind of cooperative order with a focus on cybersecurity. The Trump administration of course, will care about cybersecurity, but we'll approach it in a different way from a more America first standpoint. So we will see that play out somewhat differently.
Janet King (22:59):
We probably, yeah, we've done a lot of AI research at American Banker in the most recent one we did prior to this election survey. We asked about attitudes about regulating AI more on a more global basis and industry-wide basis. And there's an overwhelming appetite for most of the bankers that we talked to that they'd like to see more guidelines, regulatory guidelines about the best way to incorporate AI into the business of banking. So I think that's interesting.
Daniel Wolfe (23:30):
Okay, so we can go on to the next slides and we can come back to any topics. And of course, Janet and I are both reachable. Oh, we have another poll question.
Janet King (23:39):
We have another poll we do. So we wanted to talk a little bit about Fed independence and how people feel about that. So we'd like you to answer this question. Do you think the Federal Reserve takes political considerations into account when setting monetary policy? Do you think that's Yes, always? Yes. Most of the time, yes. Some of the time, no, never. Not sure. So to what extent do you think the political agenda is kind of playing into some of the policies and decisions being made by the Federal Reserve? So let's see what you said. And what we're seeing is kind of an overwhelming majority that at least some of the time people feel that that is happening, right? You've got about three out of four who are saying yes some of the time, most of the time, or always. And that's remarkably consistent, Daniel, with what we saw in the research too, when we ask people that you see about three quarters who think that at least some of the time political considerations are playing into that conversation. And then the last data point I'll show about that and then I'd love to get your thoughts, is to what extent folks feel that the independence of the Federal Reserve is going to change under a Trump administration. And it's kind of a split screen view, right? You've got about a third to 40% roughly who think it'll be either much more independent or somewhat more independent. And then you've got a good chunk of people about one in four who don't think there's going to be much of a change. Do you have any thoughts on that?
Daniel Wolfe (25:16):
So in terms of just how that's played out, this is one of the questions we asked where we can actually see in the recent news cycle how that is playing out. Now, federal Reserve chair, Jerome Powell has said that he and other officials cannot be demoted or removed from their posts by the president without cause. And this would seem to be a curious thing to say by somebody who was selected for that post by President Trump. But as we said, people don't always maintain good relationships with President Trump over the course of the administration. So that's something that, again, just kind of being very brief in the interest of time here, we've already seen start to play out. Now Powell's chairmanship expires in 2026, so there will be an opportunity just over the natural course to nominate somebody else. And Barr's Vice Chair Barr, Michael Barr, his term will expire at the same time, but they will still have their underlying board seats for a couple more years.
(26:16):
And there was one more question in our final minute about the stock market. So the stock market rally, just kind of predicting what question you're going to ask here. We saw that immediately after the election was decided in favor of Trump, and part of that was of course bank stocks, Wells Fargo, JP Morgan, and of course we mentioned before Capital One, which is in the process of purchasing Discover Financial, those stocks were part of what lifted these rallies that we saw in the past week. And another kind of adjacent phenomenon to that is crypto as well, that we saw this Bitcoin rally. And of course the more recent news of one of Trump's appointments is Elon Musk to the Department of Government efficiency, I think they call it DOGE Doge, which is of course a reference to Dogecoin, a cryptocurrency of which Musk is incredibly fond. So I'm way oversimplifying here because we we're out of time, but those are all signs, those are all outcomes of the election that are attributed to Trump's selection that were expected based on our survey here
Janet King (27:32):
And seeing it play out very quickly in real life immediate impact.
Daniel Wolfe (27:37):
Oh yeah, I mean I'm surprised that we actually have some of these predictions playing out so close to the, just one week out from the election that we can compare to what the predictions were in the survey. Yeah, it's fine.
Janet King (27:51):
It's fun to be able to see it.
Daniel Wolfe (27:53):
I did a lot of chatting. I didn't see any other questions come in from the audience or did we, I've got five different screens open here. Do you see something,
Janet King (28:04):
We did have a question about Basel three on whether we had any insights or crystal ball to see how this and similar regulations will impact community and smaller banks with regards to capital requirements, loan pricing, hedging costs and more.
Daniel Wolfe (28:18):
So the answer is no. I do not have a crystal ball. The longer answer is honestly, I would defer to John Helton and my colleague in the DC DC Bureau who wrote that column that I mentioned at the start of this conversation. You can reach out to him and find anyone and all of our contact information, email and phone numbers on the contact section of american banker.com. He lives and breathes this stuff day in and day out and I would defer to him and encourage you to reach out to him with any questions.
Janet King (28:48):
Perfect. Thank you for answering that sort of,
Daniel Wolfe (28:55):
I have the crystal ball. No, that's the short answer.
Janet King (28:57):
If you passing the ball to John, I'm sure he'll be okay. Thanks
Daniel Wolfe (28:59):
For passing the crystal ball to my colleague who is much more qualified to answer that one. Alright,
Janet King (29:03):
Absolutely.
Daniel Wolfe (29:04):
So I think we are out of time and I wanted to thank you, Janet, for walking us through this data. I wanted to thank everybody in attendance here who stayed with us past time to get to that last question. And just I encourage you to go on our websites, not just American Banker but financial planning, national Mortgage News, the other Horizon published brands. We all have data from this election survey and from an earlier survey we did in the spring as well that you can compare the results to. And we have complete roundups of our election coverage as well, which is of course ongoing as we go into the new year. So please reach out to Janet or myself if you have any other thoughts or questions. And please just dive into this data as much as you can. It's really fascinating and great work to Janet and her team on collecting this and putting this together.
Janet King (29:54):
Thanks Daniel, and thanks for joining us, everybody.
