Now that the U.S. presidential election is over, bankers have traded one type of uncertainty — who will win — for another, as they wait for impending policy changes .
Top executives at both large and regional banks said Tuesday that they anticipate a business-friendly climate under the incoming Trump administration, which should generally play out in banks' favor. Regulations should lighten, loan growth should materialize, and more mergers should happen, bankers said in comments at
Capital rules are likely to be less stiff than they would have been under a Democratic president. And the Biden administration's effort to rein in late fees on credit cards — which was already struggling in the courts — may finally be put to bed.
At the same time, some bankers worry that tariffs could reignite inflation, causing headwinds to banks' growth. President-elect Donald Trump has threatened to impose tariffs on China, Mexico and Canada when his administration takes office in less than six weeks.
The near-term impact of Trump's win "is still sinking in," said Harris Simmons, chairman and CEO of Zions Bancorp in Salt Lake City. Possible "wild cards" will be tariffs and immigration policy, he said. If Trump's "darker instincts with respect to the populist strain of economics that he subscribes to don't overcome him, there's a lot of good that will happen," he added.
But overall, Simmons described the election results as "energizing."
"We are probably going to see an era where risk-taking is more encouraged, where government is getting out of the way," Simmons said, "And so I'm quite excited about what I think it's going to present. I think [clients have] been waiting for this, and this is going to be an exciting time for all of us."
The conference, which runs through Wednesday, marked one of the first times that bankers have spoken publicly about last month's election and the possible impacts on their companies.
Here's a look at four ways in which bankers said the change in administrations will affect their businesses.
Deregulation and its effects
Bankers cheered the potential for looser regulations — beyond just banking — as a potential lift to the economy and thus loan demand.
The industry has struggled to get businesses to take out loans this year, with some bankers citing a reluctance to make long-term investments ahead of the election. But soon there will be a new president in office — and one whose team may ease regulations across a variety of industries.
"The sentiment amongst corporations is really positive," said Bill Demchak, chairman and CEO of
As M&A comes back, bankers could see a rise in revenues from the investment banking arms that arrange deals — plus a stock market that cheers dealmaking.
"I think it's fair to say there are some policy uncertainties with the new administration, but there's also an expectation that the regulatory burden should be reduced," said
Tariffs and inflation
Bankers haven't yet declared victory in the battle against inflation, and Trump's promise to raise tariffs isn't assuaging their concerns. Since the election, the president-elect has continued to lean into his campaign promise to increase the taxes on imported goods.
Recently, Trump promised that he'll use an executive order to impose tariffs of 25% on goods from Canada and Mexico if the two countries don't cooperate on immigration and drug issues.
Economic experts and analysts say such actions could further increase inflation in the U.S.
Marianne Lake, CEO of consumer and community banking at
"None of us really know exactly how the trade policy and tariffs will play out on the whole," Lake said. "They would pose risks to both inflation and growth, but I think they would pose headwinds, not derailers."
She added that the nation's largest bank by asset size thinks most policy shifts will likely be aligned with a "pro-growth type agenda."
PNC's Demchak said that the new administration and the national deficit has made inflation "a bit more of a fear than we had before." He said the economy is strong, even though inflation "appears to be more sticky than we thought."
On top of the possibility that tariff spikes will drive up inflation, Demchak said he's concerned about how protectionist policies, in conjunction with the national deficit, could impact long-term interest rates
"I look at this economy and the behaviors and the expectations of the Trump administration — if they did what they say they're going to do — the thing that I would fear is the Fed losing control of the back end of the yield curve and just a real spike in back-end rates," Demchak said. "I think it would hurt the economy a lot."
Capital rules
After an onslaught of industry criticism, the proposed Basel III endgame capital rules were watered down late in the Biden administration. Now some bankers are licking their chops for bigger changes under Trump.
"There was a revised rule put out in the summer that obviously was headed in the right direction, but we do not think went far enough," said Coleman,
"So I think more progress is needed there. And the other important thing is that it's not just Basel III," he added, pointing specifically to leverage ratios and regulatory stress testing. "There is a full suite of capital regulations, all of which need to be appropriately assessed and calibrated so we can get the U.S. banking system and the U.S. economy in the right position."
"And it remains to be seen exactly how the constellation of regulators are going to come together and address that," Coleman said.
Other bankers who spoke Tuesday were at least somewhat more guarded in their assessments of the likely impact of the final Basel III rule. The U.S. has agreed to implement the international standards, though how strict of an approach it takes is up to the heads of U.S. bank agencies.
"It's required to happen. Whether it causes an increase in capital for people or not, who knows?" said PNC's Demchak.
"Having said that, it isn't immediately and materially changing how we think about running the businesses," she added.
Credit-card late fee rule
The deregulatory push under Trump may include rollbacks of Consumer Financial Protection Bureau rules, particularly the agency's attempt to cut credit card late fees.
A federal judge
The legal battles are "in no way done at this point," Brian Doubles, CEO of the credit card issuer Synchrony Financial, said at Tuesday's conference.
Synchrony, which has historically focused on store-branded cards, derives more of its income from late fees than other major credit card issuers. To absorb the potential revenue hit, Synchrony
Customers haven't reacted too much to the changes, Synchrony's chief financial officer said Tuesday, limiting the level of attrition from potentially frustrated customers that Synchrony thought it might see.
With the rule's future still uncertain, Synchrony isn't budging from the changes it took.
"We're not planning on making any changes to the pricing actions at this point," Doubles said. "We've got to see how the litigation progresses, and we need some level of certainty."
If the late-fee rule does go away, changes to Synchrony's store-branded credit cards will require a new set of negotiations with its retail partners, Doubles said.
