Sep 21, 2016 - 1:15am

Debate Preview: What to Expect from Clinton and Trump on Financial Services


Former Director, Communications and Strategy

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Clinton Trump

We’re five days out from the first of four scheduled debates in the presidential race – three between Donald Trump and Hillary Clinton and another featuring vice presidential candidates Mike Pence and Tim Kaine.

While we hope these debates will tease out the specifics of each candidate’s plans, we have already heard a lot on the campaign trail about their key policy positions, and that offers some hints as to what we can expect to hear on stage Monday night. Drawing on their recent comments and published policy positions, we’ll set the stage for this first debate over the coming week by analyzing the facts relevant to those positions and then highlighting what the American business community will be listening for during the debate.

Next up: Financial Services and Regulations.

Topic: Dodd-Frank

Donald Trump: “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.” (October 15, 2015 interview with The Hill)

American Businesses: Trump makes a fair point about how financial regulations are having a negative impact on our economy. The financial system is regulated by a multitude of agencies which have overlapping jurisdictions, leading to turf battles rather than good policy. The Dodd-Frank Act exacerbated this problem by creating more agencies as a part of this tangled web. During the debates, we hope to hear about proposals both candidates have to make the regulatory system more rational, more efficient and better able to execute its mission.

Hillary Clinton: “As president, I would not only veto any legislation that would weaken financial reform, but I would also fight for tough new rules, stronger enforcement and more accountability that go well beyond Dodd-Frank.” (December 7, 2015 op-ed in the New York Times)

American Businesses: Since the 2008 financial crisis, the United States has seen a massive response to promote financial stability in the form of new domestic regulations and regulators, as well as new international regulatory standards enforced on U.S. financial institutions. This response created a complicated and uncoordinated new layer of regulation which was devised with the hope of making our financial system more stable, but by attempting to eliminate risk it has constrained credit and sapped liquidity from our capital markets. This has impacted all businesses, especially those that rely on our capital markets for the money they need to grow, such as start-ups looking for initial capital and job-creating manufacturers hoping to build the next factory.

Are the generators of growth and jobs—American businesses—more empowered now? Sadly, the answer is “no.” If Clinton wants a blueprint on how to drive America’s economic growth and create American jobs, we recommend she read Restarting the Growth Engine: A Plan to Reform America’s Capital Markets, a new action plan from our Center for Capital Markets Competitiveness which outlines necessary reforms to our nation’s financial regulatory system .

Topic: Glass-Steagall Act

Donald Trump via the Republican Party Platform: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment,” (Republican Party Platform 2016)

American Businesses: This idea misses the mark for how businesses use banks and why our diverse financial system sustains the world's largest economy. Re-imposing these regulations would cause Main Street businesses to take unanticipated measures, scaling back investing. America's global banks help companies like John Deere compete for business and find customers around the world, boosting exports and U.S. jobs. Breaking up our banks will mean more business for Chinese banks (which are much larger than ours, as Warren Buffet pointed out), but it won't do much for America.

We are poised to take advantage of all the technological innovation in financial services. But to do so, we need thoughtful, forward-looking leadership and smart regulation, not nostalgic proposals like Glass-Steagall that will only hurt our economy by attempting to turn back the clock more than 80 years.

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About the Author

About the Author

Chris Hoyler
Former Director, Communications and Strategy

Chris Hoyler is a former director of Communications and Strategy at the U.S. Chamber.