Banks brace for adjustments by a Biden-led administration

Biden has said some of his top priorities as president will be addressing coronavirus, the economy, climate change and matters of racial and social equity. While Democrats tend to prefer more regulation over less, the financial services industry isn’t an immediate target of the incoming administration’s focus.

Meanwhile, a blue wave didn’t wash over Congress as predicted, so a scenario where Dems could push through policies unchecked has been avoided.

“There’s a divided government with the GOP winning the Senate, which could act as a firewall to prevent anything too far out there in terms of harmful legislation for banks,” said James Thurston, spokesman for the Ohio Bankers League trade group.

The status quo tends to benefit the banking sector that prefers predictability to change.

But in terms of a general regulatory outlook, a major unknown is who will lead key agencies that could make an impact.

This could potentially bring some dramatic changes depending on who is appointed to lead the Treasury, Office of the Comptroller of the Currency and Consumer Finance Protection Bureau, for example. Bankers seem to bristle at the notion of Barack Obama appointee Janet Yellen leading the Treasury, while some CFPB candidates have ties to Sen. Elizabeth Warren, who championed its inception.

The CFPB was largely dormant through Trump’s administration. A more active CFPB is something banks worry about.

But Biden’s appointments would need to be confirmed by a GOP-led Senate, if Republicans win at least one of two runoff elections in Georgia, meaning a more moderate leader will be installed compared with anyone too radical or progressive from a conservative banker’s point of view.

Any new change in regulatory regimes causes an amount of “angst,” said Emily Leite, head of advocacy for the Ohio Credit Union League trade group, which is closely following who might head the National Credit Union Administration.

“What might new leadership bring to the table? Could it result in more expenses? A different way of doing business? Will there be some things we can’t do in the future? What are the impacts and opportunities, and what does it mean for us? Any new regulation comes with action and expense and time for credit unions,” Leite said.