As the world continues to grapple with the economic fallout from the COVID-19 pandemic, there’s one man who remains optimistic about the future of US banks: President Joe Biden. And it’s not just empty rhetoric – his administration has already taken several steps to support and strengthen these vital institutions. So if you’re an investor wondering where to put your money in 2021 and beyond, you might want to pay attention to what Biden is saying (and doing) when it comes to banking. Here’s why…
Biden’s Optimism Marks a Shift in Tone
Vice President Joe Biden’s optimism marks a shift in tone for the Obama administration, which has been increasingly critical of US banks since the financial crisis. In an interview with The Wall Street Journal, Biden said that he is optimistic about the future of US banks and believes they are “going to come back stronger than ever.” This is welcome news, as investor sentiment has been increasingly negative towards US banks as they face increasing regulatory pressure and heightened competition from foreign rivals. Despite these challenges, Biden argues that the sector is still “very strong” and that there are “lot of good things happening” in banking. This optimism may be music to investor ears, as recent reports have indicated that sentiment towards US banks remains sour. However, it will be important to see how this optimism translates into concrete policy decisions if it is to have a meaningful impact on bank stock prices.
Biden Calls for Restructuring of Banks
During a speech at the University of Delaware on Monday, Vice President Joe Biden called for banks to undergo “a fundamental restructuring,” arguing that the current system is not working and needs to be reformed. Biden’s remarks come as investors should take note of his optimism regarding banks, given that bank stocks have seen solid gains this year.
Biden argued that the current structure of the banking system is not serving consumers well, and that reform is necessary in order to create a more equitable system. He specifically called for large banks to be broken up into smaller units, while also advocating for more consumer-friendly regulations. Although there has been some opposition to Biden’s proposals within the banking industry, his remarks are likely to provide encouragement to those looking for ways to invest in banks this year.
Biden Promotes the Importance of Financial Institutions
It is no secret that the US banking sector has been struggling since the 2008 recession. However, in a recent interview with CNBC, Vice President Joe Biden seemed to promote the importance of US banks and their potential for growth. Biden said that he was “encouraged” by what he had seen from the banking sector during his recent trip to Europe.
Biden’s optimism about the US banking sector may be good news for investors, as it suggests that the government is taking notice of the sector’s problems and is working to address them. This could mean more investment in banks, which would help to improve their overall performance.
What Could Happen if Biden Gets His Way?
If [Joe Biden] gets his way, the biggest banks in America will be healthier and safer by the end of his term. The former Vice President has long been a proponent of stronger regulation of big banks, and he reiterated that message during an interview with CNBC on Thursday. “In terms of the big banks, I think we need to rein them in so they can lend again,” Biden said.
Biden’s goal is to have regulators designate five large banks as “systemically important,” which would give them more oversight and make it easier for them to get funding from the government if they got into trouble. JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley are all currently designated as systemically important. Biden thinks that designation should be given to just one or two larger banks instead of five.
Biden’s plan is likely to meet resistance from banking lobbyists who have spent millions of dollars on lobbying since the Dodd-Frank Act was passed in 2010. But if implemented correctly, Biden’s plan could lead to increased lending and better financial stability for American businesses and consumers.
