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How Would Banks Handle a Trump Nomination?

WASHINGTON — The advent of Donald Trump as the front-runner for the Republican presidential nomination is forcing banks to take a harder look at the New York businessman and what he might mean for the industry if he wins the White House.

In a typical election year, most bankers support the Republican candidate. That was likely to be particularly true this year, given the industry's continuing anger over the Dodd-Frank Act and the desire for regulatory relief. But this is far from the typical election — and Trump is nothing like the typical nominee.

"A Trump nomination will scramble lines in lots of sectors … and that most certainly includes the financial services sector," said Larry Sabato, the director of the Center for Politics at the University of Virginia.

One big problem is that Trump has articulated nothing approaching a comprehensive plan when it comes to financial policy beyond vaguely criticizing Dodd-Frank.

"Trump is a wild card," said Camden Fine, president of the Independent Community Bankers of America. "I have no idea how he would view our issues."

Love him or hate him, Trump provokes strong reactions from much of the electorate, bankers included. His volatile temperament and penchant for showmanship have left many skeptical.

Howard Headlee, the head of the Utah Bankers Association, compared Trump to a loan applicant, suggesting bankers would be reluctant to approve him.

"My experience is that people who exude an overwhelming sense of confidence often do so to mask a fundamental deficit of trustworthiness," said Headlee, who said he is backing Sen. Marco Rubio, R-Fla., for the nomination. "Someone comes in with a lot of talk and not a solid plan, they don't do well in loan committee. Trump sets off a lot of triggers that people are going to have to wrestle with… He pushes all the buttons a bad loan pushes. He just screams bad loan."

At the same time, however, Trump hardly seems anti-bank. Indeed, he has years of experience working with banks as a real estate developer and has signaled that he supports less regulation.

"It's terrible," Trump told The Hill newspaper on Oct. 14. "Under Dodd-Frank, the regulators are running the banks. The bankers are petrified of the regulators. And the problem is that the banks aren't loaning money to people who will create jobs."

That attitude could be a positive for the industry if Trump were to win the presidency, some observers said.

"He has been hard on Wall Street, he gets the populist message, but at the same he has said that the regulators are running banks and all these new regulations are making banks afraid to lend. That seems to be his big focus — how do we get banks to lend again?" said Justin Schardin, associate director of the financial regulatory reform initiative at the Bipartisan Policy Center.

Lawrence Baxter, a professor of law at Duke University and former Wachovia banker, said Trump has more understanding of the banking system than some might expect.

"I don't buy the argument that because he does not have concrete policies that he would be a disaster," Baxter said. "You don't get to arrange large-scale loans on a repeated basis without becoming very familiar with how the banking system works."

Still, Trump plays by his own set of rules — and bankers like predictability. That may mean that, should Hillary Clinton win the Democratic nomination, many Wall Street bankers support her. They've already given millions to her campaign, suggesting they are comfortable with the former New York senator and secretary of state.

"They may disagree with Clinton and her policies, but they at least know her. There is more familiarity with her, especially with the heads of the firms," said Brian Gardner, an analyst at Keefe, Bruyette & Woods.

Although Clinton has said she would oppose any significant changes to Dodd-Frank, her banking plan is largely in favor of reforms "at the margins," Gardner said.

"The possibility for change under Trump is much greater," he added.

But Headlee is less certain how community bankers would line up.

"In a hypothetical matchup between Trump and Clinton, it's not clear who bankers will support," he said.

Whether Trump will be the Republican nominee will be clearer after Tuesday, when 12 states vote in primaries across the country. If Trump wins most of those races, he may be all but impossible for Rubio or Sen. Ted Cruz, R-Texas, to overtake in the competition for delegates, barring a major upset.

Trump was heavily criticized by rivals Rubio and Cruz during the debate on Feb. 25, who both mocked his lack of specifics on how he would tackle the country's problems. But Trump received a boost Friday after New Jersey Gov. Chris Christie, another former rival, endorsed him.

That endorsement underscores another area of intense interest for bankers — who Trump's advisers are on economic policy and who he would appoint if elected president.

"Trying to imagine what a Trump administration would do depends on the people he surrounds himself with," said Fine. "I don't think anybody knows who that would be."


(8) Comments



Comments (8)
Tell us "how" Donald. Enough of "what." Claiming to be a "great negotiator" is of zero value if your business skills have led you to four bankruptcies. All it proves is that you hire "great" lawyers to help you run from your financial obligations. Being able to sell your name to the highest bidder provides zero information about your business acumen, management skills or what your "brand" stands for other than an eternal quest for money. By the way, it's about time he showed us his financials; he's running out of excuses as to why he can't. Fedupwithdonaldtrump.com. Check it out.
Posted by gptobin2003 | Friday, March 04 2016 at 3:20PM ET
Trump's experience with banking is largely limited to bankruptcy filings and debt workouts. Perhaps he will apply his much-vaunted "banking experience" to discharging the national debt in a similar manner. Time for a jubilee?
Posted by Kenover | Friday, March 04 2016 at 2:22PM ET
How could a responsible banker want a serial bankruptcy filer to be president? He won't bring "business people" to his team, he'll fill it with lawyers and accountants who have spent their previous lives looking for loopholes. fedupwithdonaldtrump.com.
Posted by gptobin2003 | Monday, February 29 2016 at 1:04PM ET
"Happy days are here again" for Wall Street if Hillary wins. Trump probably won't be too hard on Wall Street either. It's lose-lose for The American People with either authoritarian in office.
Posted by WoodrowWilson | Monday, February 29 2016 at 12:21PM ET
I am a Trump supporter and I think bringing a businessman--especially one who has had extensive experience with banks and is committed to reducing excessive regulation to cause banks to make loans--would be a big plus for the economy. Hillary is not going to mess with Dodd Frank lest she alienate her friends like Elizabeth Warren. You can't trust her in any event. Trump is smarter than any candidate out there and will do what is best for the financial services industry as part of his business skills in bringing back the economy. The Democrats brought you Dodd-Frank. Don't forget that.
Posted by randyh44 | Monday, February 29 2016 at 12:19PM ET
In November, the choice will be bad vs. worse no matter how you view it. I weep for our country, and our industry.
Posted by raytomp | Monday, February 29 2016 at 12:12PM ET
The absolute only thing that I can think of that may be less than horrific with a Trump election is that maybe he brings in actual business people - who understand that free enterprise is not the enemy - to regulate business. I won't hold my breath...but it would be nice.
Posted by mrsmy2cents@gmail.com | Monday, February 29 2016 at 11:47AM ET
I should add that I am not a Trump supporter for other reasons.
Posted by Lawrence Baxter | Monday, February 29 2016 at 10:20AM ET
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