Is Anybody’s Guess
With Democrat Joe Biden ahead of the polls, factions within his group are now competing. Which side of Wall Street regulation will Biden favor? Is it Wall Street, or will it be Main Street? At present, it’s anybody’s guess.
On one side are the progressives, who think that Biden is on the side of Wall Street. On the other side are Wall Street Democrats, who like things the way they are. Both sides hope that If Biden wins, he follows President Barack Obama’s lead. The then-President signed the Dodd-Frank financial-reform act in 2010. The final version did not include provisions such as breaking up big banks.
Jeff Hauser of the Center for Economic and Policy Research thinks it's still up for grabs. He said: “If Biden wins, it’s likely one of the wings will be very unhappy by Inauguration.” He said that Biden’s early appointments “will indicate which grouping is ascendant.”
Biden Supports Main Street
During this year’s campaign period, Biden said he wants to go tough against the business. He will seek to revive and strengthen the Consumer Financial Protection Bureau. He said he wants to return the Bureau to its watchdog days during its time with Senator Elizabeth Warren.
Biden also favors extending banking powers for post offices. He also wants Federal Reserve individual accounts to process loans to the poor. This opens up banking options for people without bank accounts. While this extends benefits towards ordinary folk, it runs across consumer banks. These banks prefer to have the business to themselves.
The Democrat nominee also supports the creation of a public credit-reporting agency. This idea, originated by his then-rival, Senator Bernie Sanders, can help more people get loans. It does so by eliminating racial discrimination in credit scoring.
But Biden Also Loves Wall Street
Biden’s earlier campaign featured an ad where a narrator stated his ties with Wall Street. The ad said: “No one has to tell him Wall Street didn’t build this country.”
His relationship with MBNA, the Delaware credit card company, was legendary. His closeness with the company gave him the moniker “Senator Joe Biden, D-MBNA.” The Biden family got perks from the card company in many forms. Company plane rides, a Wyeth painting, his son Hunter getting a job. The same son, Hunter, consulted for MBNA during their bankruptcy issue. At one point in 1999, Biden got so fed up with the media mocking his ties with MBNA. He stated then: “I’m not the senator from MBNA.”
With the Democrats leading in the polls, Wall Street is signaling that it’s ready for a Biden presidency. Banks like JPMorgan Chase & Co. wrote investors that Biden is good for the stock market. They say his government spending plan could stimulate the economy enough. Meaning enough to offset the coming loss of Trump’s tax cuts.
Repeal of Glass-Steagal Act and BAPCPA
Biden recently said he regrets some of his earlier stands. This includes the 1999 repeal of the Glass-Steagal Act. This law barred investment banks from merging into powerhouse banks. Eventually, these superbanks became the institutions that were “too big to fail.” Critics said that the repeal of this Act led to the 2008 financial crisis.
Mr. Biden was also party to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) legislation. This Act made it difficult for consumers to shed their debts, including student loans. Then Harvard law professor Elizabeth Warren is one of Biden’s antagonists on BAPCPA. She said: “Those who want to say the way to solve rising consumer bankruptcy is by changing the law are the same people who would have said during a malaria epidemic that the way to cut down on hospital admissions is to lock the door.”
If Biden manages to win the presidency, we still have no idea which persona will talk to Wall Street. Analysts say that once we find out which advisers get positions, we’ll get to know which side he'll embrace. For one, he now enjoys a good relationship with erstwhile rival Elizabeth Warren. He is also taking ins supporters from another rival Bernie Sanders. By association, the Democrat lineup would “lurch to the left, no question.” This is according to Sen. Pat Toomey, (R-Pa) member of the Senate Banking Committee. Meanwhile, progressives are wary about the eventual position of Steve Ricchetti. The latter is a veteran Wall Street lobbyist who was chief of staff during Biden’s vice presidency.
Watch this as Bloomberg Markets and Finance reports on How to trade a potential Biden presidency:
Will the real Joe Biden please stand up? At least before the elections, so at least voters will know who to vote for. Do you think it’s Wall Street Joseph Biden, former credit card shill and now Wall Street silent support? Or will it be Main Street Joe, with his pals Bernie and Liz out to change the banking industry from the inside out? Tell us what you think. Leave your thoughts in the comments section below.
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