• Jake Heronema

How Does A Biden Win Affect The Financial Policy

Democrat and former U.S. Vice President Joe Biden was declared the winner of the 2020 U.S. presidential election by several major television networks on Saturday, beating Republican incumbent Donald Trump who took an industry-friendly stance on regulation. While Biden is unlikely to prioritize a financial industry crackdown, he is expected to take a stricter line than Trump, as well as his former boss, President Barack Obama. Biden has tapped former derivatives market regulator Gary Gensler, who has a reputation for being tough on Wall Street, to work on a transition plan for financial industry oversight.

The pandemic has shone a harsh spotlight on America's racial and wealth inequalities, galvanizing Democrats to use a range of policy levers to address the problems. Those include the 1977 Community Reinvestment Act, a fair lending law giving banks regulatory points for lending to low-income communities. Biden has pledged in campaign materials to expand the rules to other sectors, including mortgage and insurance companies.

Addressing the country's affordable housing crisis is a priority for Democrats and Biden. A Biden administration would probably try to halt a Trump plan to release housing finance giants Fannie Mae and Freddie Mac from government control, a move Democrats worry would increase the cost of mortgages for middle- and lower-income Americans.

Biden has also pledged to review rules by Trump's housing regulator which are meant to guard against lending behaviors which disproportionately adversely impact racial minorities.

Biden has called for a robust Consumer Financial Protection Bureau (CFPB), created following the 2009 financial crisis to ensure banks did not take advantage of consumers. The agency has been less aggressive under Trump, and Biden has endorsed stricter oversight of consumer lending and called for a crackdown on discriminatory lending practices.

Among Biden's most eye-catching policy proposals is the creation of a public credit reporting agency to compete against the likes of Equifax and TransUnion. According to Biden's campaign materials, the new agency would aim to “minimize racial disparities” in credit reporting after some studies found the current system excludes minorities.

Biden has expressed support for a long-held progressive policy to get the U.S. Postal Service to provide basic banking services. Progressives say the plan would reduce economic inequality by allowing “unbanked” Americans to access reasonably priced banking services and credit, and to avoid predatory lenders and expensive check cashing services.


“What a Joe Biden win could mean for financial policy,” by Pete Schroeder and Katanga Johnson, Reuters, November 8, 2020.