Factbox: What A Joe Biden Win Could Mean For Financial Policy
While Democratic presidential nominee Joe Biden is unlikely to prioritize a financial industry crackdown if he wins on Nov. 3, he is expected to take a much tougher line than Trump and his former boss President Barack Obama.
- Last Updated: October 5, 2020, 17:57 IST
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WASHINGTON: While Democratic presidential nominee Joe Biden is unlikely to prioritize a financial industry crackdown if he wins on Nov. 3, he is expected to take a much tougher line than Trump and his former boss President Barack Obama.
Banks and investors were preparing for a Biden victory over the weekend after Trump tested positive for COVID-19 on Friday, in a blow for his campaign.
Here are some of the key areas his administration and agency picks would likely focus on.
THE COMMUNITY REINVESTMENT ACT
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 which gives 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 likely halt the Trump administration’s 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 or other protected groups.
CONSUMER PROTECTIONS, CREDIT REPORTING
Biden has called for a robust Consumer Financial Protection Bureau, which was created following the 2009 financial crisis but has been less aggressive under Trump. Biden has endorsed stricter oversight of consumer lending and called for a crackdown on discriminatory lending practices.
Among his most eye-catching policies 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 disadvantages and excludes minorities.
CLIMATE CHANGE RISKS
Influential Democratic lawmakers and policy experts are pushing hard for public corporations to be required to disclose climate change risks to their businesses and for such risks to be incorporated into the financial regulatory system. Biden has called for swift action to address climate change and policy experts believe his agency picks will pursue these ideas.
In a policy about-face, Biden has adopted a bankruptcy reform plan pushed by consumer advocate Democratic Senator Elizabeth Warren which he previously opposed as a Senator. The proposal would make it easier for Americans to pursue bankruptcy and shield assets like houses and cars from debtors during the process. Such a plan, though, would require legislation which would require a Democratic majority in the Senate.
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, allowing them to shun predatory lenders and expensive check cashing services.
The banking industry, though, is opposed to the creation of a taxpayer funded competitor and would fight the plan.
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