WASHINGTON — The Biden administration and former President Donald Trump have competing economic pitches to make to Wall Street in a tight presidential election that is increasingly centered on taxes and the economy.
"The Trump pitch is a lighter regulatory touch, keeping corporate taxes low," said Brian Gardner, chief policy strategist at Stifel. "The Biden pitch is stability, steady hand, you may not love us but we're not populists and we can get along."
Treasury Secretary Janet Yellen traveled to New York City on Thursday, giving a fireside chat at the Economic Club of New York. She also privately met with over a dozen CEOs and business leaders — including major Democratic donors on Wall Street, the investment banker Blair Effron and private equity investor Mark Gallogly, according to a person familiar with the matter.
It's not the first outreach she's done for the administration to bankers. Just last month, she met with 25 bank CEOs at a meeting with the Bank Policy Institute, the person said.
Also on Thursday, Trump met with CEOs at the Business Roundtable in D.C., a group that includes JPMorgan's Jamie Dimon, Bank of America's Brian Moynihan and Citigroup's Jane Fraser. The Biden administration sent chief of staff Jeff Zients to the roundtable meeting in lieu of the president, who is in Italy for the G7 meeting.
It's a critical time in both campaigns to court Wall Street donors. With less than five months to go before election day, both campaigns are pouring money into several key swing states.
Wall Street donors are faced with two different visions on how to run the economy. Yellen and the Biden camp are making the case that stability, combined with investments in critical areas like infrastructure and positive results on inflation and unemployment, will fuel long-term economic growth.
"We have learned through experience that heavy-handed central planning through government dictates is not a sustainable economic strategy," Yellen said. "But neither is traditional supply-side economics, which ignores the importance of public infrastructure, education and workforce training, and government-supported basic research. Traditional supply-side economics wrongly assumes that policies such as tax cuts for those at the top and deregulation will fuel growth and prosperity for the nation at large."
The Trump campaign, meanwhile, is promising deregulation — including for banks — and continued lower taxes for financial firms and other corporations.
At least so far, the banking industry's biggest donors are continuing to back mostly Republican groups and causes. In the first 15 months of the election cycle, 59% of election contributions from individuals who work at commercial banks went to Republican candidates and groups, compared to 60.4% in the same period for the 2022 midterm elections and 56% in the 2020 presidential election, according to an analysis of Federal Elections Commission data from Open Secrets done for American Banker.
That's not necessarily reflective of how a majority of people in the banking industry think about the election, however. A bulk of those donations come from a small number of individuals, and some small banks rank high in the amount given by individuals because their executives donate heavily.
For instance, Robert Marling, the former chairman and CEO of Texas-based Woodforest Financial Group — whose banking arm Woodforest National Bank is most well-known for opening branches in Walmart stores — has donated $500,000 so far this election cycle to Club for Growth Action, a free market super PAC aligned with Republicans. Albert Hegyi — chairman, president and CEO of 1st Financial Bank USA — has likewise donated hundreds of thousands of dollars to national Republican committees, according to FEC data.
The Biden administration could have an opening to convince more Wall Street and banker donors on corporate taxes, Gardner said. Despite Trump's reported private warnings to donors that tax bills will increase under a second Biden term, Gardner said that corporate taxes could very much be in the mix under Republican leadership, depending on how the election plays out.
"In my opinion, the Republican party of 2025 is not going to be the same Republican party as 2017," he said. "The Republican party is evolving into a more working class party and now represents some of the poorest districts in the country. They don't care as much as their predecessors did about the corporate tax rate because it's not relevant to them and their constituents."
Mehrsa Baradaran, a banking law professor at the University of California, Irvine, who was under consideration as a nominee to lead the Office of the Comptroller of the Currency early in the Biden administration, said that bankers also might not have a lot to fear from another Biden term compared to a Trump one.
"There will be differences in what they say and how they say it, and as far as the structure of banking and finance I think there would be more permissiveness in the Trump administration in crypto and banking," she said. "But honestly, what I'm worried about is that they're both going to do the same thing."
