After a Rothschild prediction that Donald Trump's win could result in inflation, US financial banks still likely see his policies as a better option than Kamala Harris.
With the US presidential election getting nearer, many banks are suddenly favoring a Trump victory.
Banks believe his return will bring looser regulations and support for corporate mergers, both of which could drive up Wall Street profits, according to Yahoo Finance. The problem with Harris would be a tighter regulatory stance that would continue the Biden administration's restrictions, potentially making it more challenging for large financial institutions to profit.
Besides banks, analysts also noted that investors are now leaning towards a Trump presidency, predicting that bank stocks can possibly decline under Harris' administration.
Banks have been strong this year so far, partly due to Fed rate cuts and the return of a strong US economy. Trump's winning could further support Wall Street's growth, per analysts.
Trump's Bank Regulations
In a report by CNBC in 2019, Trump's administration rolled back regulations from the 2008 financial crisis, which in return, benefited large US banks. Harris, however, has a track record of taking on big banks during her time as an attorney general in California, which means heightened regulatory oversight.
Currently, the unresolved issue for major banks is the Basel III capital requirement, a standard that calls banks to hold larger financial buffers to prepare for potential losses. Trump could likely distance from these, while Harris will likely maintain it, impacting the financial flexibility of US banks. In specific, Trump could replace regulators across major federal agencies with a lenient approach toward the financial sector. Big banks have been hoping to have new appointees to give way for major mergers and policies.
Regardless, banks promise to still adapt accordingly to whoever wins the 2024 US presidential elections after November 5 voting.
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