How the Election Could Impact Banks

Just days away from what many expect to be one of the tightest—and most consequential—U.S. presidential elections in recent memory, banks are watching closely to see how either a Kamala Harris or Donald Trump victory might impact the industry. From shifts in regulatory approaches to broader economic policies, a new RMA Journal article explores the top areas that could be affected. Here’s a breakdown: 

Regulation and Capital Requirements 

• Harris: A Harris administration would likely align with the Biden approach, emphasizing consumer financial protections and possibly expanding regulations like those aimed at “junk fees.” Harris’ past record includes a significant $18 billion settlement with banks during her tenure as California Attorney General. 

• Trump: Trump is expected to pursue a lighter regulatory stance, potentially revising or blocking new requirements, including the increased capital requirements of Basel III. 

Consumer Protections and Bank Revenues 

• Harris: Would likely push for consumer protections similar to those under Biden, with an emphasis on practices regarding fees and lending transparency. 

• Trump: Could scale back consumer protection efforts, yet has also proposed a temporary cap on credit card interest rates (although this may face legal challenges). 

Taxes and Economic Policies 

• Harris: Proposes raising the corporate tax rate from 21% to 28% and supports letting the top individual marginal tax rate for high earners revert from 37% to 39.6% in 2025, effectively ending a key element of Trump’s Tax Cuts and Jobs Act. 

• Trump: Plans to cut corporate taxes further—including reducing the corporate tax rate to 15% for companies manufacturing domestically—and to widen the scope and amount of tariffs. 

Housing and Mortgage Lending 

• Harris: Calls for the construction of 3 million housing units and seeks to boost homeownership, particularly for first-time buyers, with proposed down payment assistance. 

• Trump: Has promised tax incentives for first-time buyers, and supports reducing regulation and opening portions of some federal lands for new home construction. 

Interest Rates and Inflation 

• Both candidates are projected to increase the national debt, which could contribute to higher interest rates. The Committee for a Responsible Federal Budget projected that a Trump presidency would result in $7.5 trillion more debt by 2035, compared to a $3.5 trillion increase under Harris. Meanwhile, analysts say Trump’s proposed tariffs and immigration policies could also drive inflation higher, while Harris’ policies might have a more stable inflationary effect. 

Regardless of the election outcome, banks are likely to see significant shifts in regulatory and economic policies that could shape lending, consumer protections, and tax strategies. Until election results are confirmed—and potentially long after—expect uncertainty to continue across these critical areas. 

For more, read the complete article.