As the Democratic presidential field first began to emerge, there was every reason to believe financial services policy would be at the forefront in the 2020 election. But with the candidates still introducing themselves to voters and honing their message, surprisingly little has been said about banks.
Financial issues struck a chord in previous presidential elections. The 2008 race was during the midst of the crisis. The next two cycles featured GOP candidates vowing to repeal Dodd-Frank. In 2016, then-Democratic candidate Bernie Sanders kept up his attacks on the big banks. Even Donald Trump, then the GOP nominee, at one point appeared to support restoring Glass-Steagall.
The same could be the case in 2020. Progressive candidates like Sanders and Sen. Elizabeth Warren, D-Mass., are poised to keep the pressure on the industry, and their wing of the party has a bigger sounding board than in 2016. A backlash over deregulatory moves by Congress and the Trump administration could fuel a greater focus on banking policy.
But in the early going, financial regulation is largely out of the national spotlight, making way for issues like climate change, health care and immigration.
Why is financial regulation now on the back burner? It could be because the 2020 elections will be over a decade after the crisis, and other issues may resonate more soundly with voters, particularly younger voters who may not be familiar with the 2008 downturn.
Although financial services policy has taken a back seat to other issues, some candidates have brought it up. For example, Sen. Kamala Harris, D-Calif., has discussed her role helping to oversee the 2012 national mortgage settlement with large servicers. Bloomberg News
“There just isn’t that much populist anger at the banks, over a decade after the financial crisis, with interest rates low and the industry largely out of the student loan business, which seems to be touching the millennials most pointedly in the current environment,” said Charles Gabriel, president of Capital Alpha Partners.
There are, of course, obvious exceptions. Since announcing her run, Warren has remained vocal on regulatory issues. She has kept the heat on Wells Fargo over its compliance issues and on regulators responsible for monitoring the bank, as well as criticizing regulatory relief provided by the Consumer Financial Protection Bureau — an agency that was her brainchild — under Trump-appointed leadership.
At a CNN town hall April 22, Warren lauded former President Barack Obama for ensuring that there was a strong CFPB after the financial crisis.
“He was the one who stood there when everyone else said in his administration, ‘Throw that agency under the bus,’ ” Warren said at the town hall. “And he said, ‘No, I’m not going to let this crisis pass and not come away with a consumer agency that makes sure that families never get cheated again.’ I will always be grateful to the president for that.”
And Sanders still appears focused on his mission to rein in the big banks. Last year, before he announced his candidacy, he proposed legislation to cap a financial institution’s total exposure at 3% of the nation’s GDP, which would result in the breakup of the six largest financial institutions. His campaign website lists reinstating Glass-Steagall, capping ATM fees, auditing the Federal Reserve and reforming the credit bureaus as part of his Wall Street reform agenda.
But that agenda isn’t featured prominently on the list of issues he is prioritizing. In several public appearances, Sanders has placed more emphasis on passing a Green New Deal to combat climate change, ensuring universal health care, and even election reform to allow incarcerated felons to vote.
“Because the candidates are still looking to distinguishing themselves based on their individual background, they’re not all focusing on the same issues, although an interest in attracting young voters has highlighted some issues like climate change,” said Quyen Truong, a partner at Stroock & Stroock & Lavan. “Over time, you may see issues ranging from climate change to finreg become components of several candidates’ platforms as they evolve.”
Other candidates could start to focus on regulatory policy. For example, Sen. Kamala Harris, D-Calif., has discussed her role helping to oversee the 2012 national mortgage settlement with large servicers.
But a debate over banking could also remain subdued. Earlier this year, Sen. Sherrod Brown, D-Ohio, a progressive on regulatory issues and the ranking member of the Senate Banking Committee, drew attention as a possible presidential candidate. But he has since decided not to run.
Sen. Kirsten Gillibrand, D-N.Y., has touted a plan for the U.S. Postal Service to offer banking services. “We should expand access to affordable banking services and virtually eliminate predatory lending by creating postal banking,” her website says. “We need to rein in Wall Street risk and protect our financial system so unchecked greed can’t hurt families again.” Yet Gillibrand has yet to draw attention in polls or media coverage.
“My overarching view is that financial services issues will be a second-tier issue in the 2020 cycle,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading.
This piece originally ran in Bankshot a column for real-time analysis of today’s news from American Banker, Credit Union Journal’s sister publication.