Impact of a Trump or Clinton Presidency on Financial Institutions

TRUMP OR CLINTON PRESIDENCY ON FINANCIAL INSTITUTIONS 5

A Trump or a Clinton Presidency will have a diverse impact on thefinancial institutions, based on their current and past ideologies.While the Clinton presidency may present more restrictions for thefinancial institution, a Trump presidency may be less stringent. Thediscussion on the two presidential candidates will illustrate thattheir presidency will have a contrasting impact on the financialinstitutions.

A Clinton presidency would make the business less lucrative and somefinancial institutions may opt out of big ventures due to the highrisk associated her policies. For instance, one of Hillary Clinton’sagenda is to reduce the gap between the rich and the poor. To dothis, she seeks to reduce the loan burden on college students.According to Clinton’s manifesto, graduates who are late to repaytheir college loan will not be subjected to high fines. This policywill affect banks in that they reap big in the form of interests fromstudents who cannot pay their college loans on time (Braverman,2016).

Clinton wants to expand the social security because reports indicatethat the fund will be depleted by the year 2030. Many Americans aremaking less contribution to the fund hence jeopardizing its abilityto remain sustainable over the next few decades. Clinton is worriedthat if the fund were depleted then the rate of government dependencyby the senior citizens would go up. She plans to revive the scheme byincreasing public awareness about the benefits of saving for old age.

She also supports the Consumer Financial Bureau that seeks to protectconsumers from any malpractices by financial institutions. She isafraid that financial institutions take advantage of the ignorance ofthe American public to extort more money. For instance, some bankskeep making service charges to dormant bank accounts instead ofinforming their owners to shut them down. In their defense, theyrefer to the fine print stipulating that the bank will continue toimpose charges as long as an account is not yet closed. The bureauwill cut down on malpractices of financial institutions.

On the other hand, a Trump presidency could be a soft result for thebanks. The result may be welcome to the banking institutions as Trumpseems to discourage stringent regulation of the banks. According toBorak and Williams (2016), Donald Trump believes that regulations onfinancial institutions only serve to discourage them from advancingloans to small businesses. This is an idea that would lead toincreased money supply in the economy if Trump wins the elections.

In addition, Trump proposes that the American banking sector doesaway with Dodd-Frank. If it is not eliminated, at least it should bechanged. He argues that Dodd-Frank has denied bank loans to peoplethat need them the most- small business owners. Instead, theregulators of the banking sector get to decide who should get loansand who should not rather than letting the forces of demand andsupply to take effect.

Trump is opposed to the idea of breaking up big banks. In addition,he terms the suggestion by referring to it as a leftist ideology. Healso claims that the big banks have held the economy of the USA sinceindependence. Dismantling such big financial institutions would haveunprecedented effects on the American economy. He feels that it isnot yet the time to do away with big banks.

Trump is of the idea that the government should bail out banks in theevent that the 2008 recession occurs. He claims that banks are anintegral part of any economy and that no sane government would sitdown and watches them hit the floor. In his opinion, they can eitherbail them out or decided to nationalize them. Either way, banks mustkeep running because they represent a very important part of theAmerican economy.

References

Borak, D., and Williams, H., (2016). Where Clinton and Trump Standon Wall Street. Wall Street Journal. Retrieved from&lthttp://graphics.wsj.com/elections/2016/where-do-clinton-and-trump-stand-on-wall-street/&gtaccessed August 2, 2016.

Braverman, B., (2016). 9 Ways Hillary Clinton’s FinancialPlan Will Affect Your Wallet. Go Banking Rates. Retrieved from&lthttps://www.gobankingrates.com/personal-finance/9-ways-hillary-clintons-financial-plan-affect-wallet/&gtaccessed August 2, 2016.