Garnet Capital Advisors Blog

While Republican candidates are largely staying away from banking issues as they struggle to be heard above the welter of would-be nominees, Democratic hopefuls are to varying degrees talking tough about further financial reforms.

Even though it's more than a year until Election Day, let's take a look at where candidates stand on issues closest to bankers' hearts and wallets.

Glass-Steagall Act redux?
Maryland ?Democrat Martin O'Malley, that state's former governor, has vowed to revive the Glass-Steagall Act. The Depression-era law, swept away for all intents and purposes in 1999 under President Bill Clinton, kept financial institutions from having both commercial and investment bank activities under one roof. A position paper on the candidate's website says rebuilding that firewall would be a top priority.

Not surprisingly, Vermont Sen. Bernie Sanders touts among his bona fides having fought against the loosening of prohibitions in 1999. Sanders, who describes himself as a democratic socialist, has co-sponsored a bill to bring back Glass-Steagall.

Hillary Clinton, the former senator and secretary of state who until recently had been considered a lock for the Democratic nomination, has a more nuanced view. Perhaps her stance is complicated by her husband's role in repealing Glass-Steagall, but she is on record as saying bringing it back is a simplistic solution.

More interesting is that support for renewing the bright line between commercial and investment banks has support on the GOP side. Dr. Ben Carson, who in one new poll has nearly tied front-runner Donald Trump, embraces a new Glass-Steagall Act, according to Bloomberg News. Rick Perry, who recently quit the race, had pined for something like a new Glass-Steagall.

Republicans largely silent on banking issues
Staying among the GOP contenders, talk of financial reforms is staying under the radar compared to "red meat" issues like immigration as a crowded field puts a premium on breaking through the noise instead of putting forward nuanced policies. That's the consensus American Banker found recently when it surveyed the Republican field. 

Brian Gardner, an analyst for Keefe, Bruyette and Woods, said GOP candidates are not trying to make fine distinctions about financial reforms just now.

"The whole Wall Street reform issue is a very blunt instrument," Gardner told American Banker, "it could come to hurt a candidate on the Republican side if they're accused of being pro-big-government."

Dodd-Frank opposition a talking point
Still, not every Republican candidate has been mum on banking issues. While no GOP candidate is expressing love for the Dodd-Frank regulations, Florida Sen. Marco Rubio and Wisconsin Gov. Scott Walker have gone the furthest in calling for their complete repeal.

Where is the money going?
One interesting way to judge Wall Street's wishes is to watch which candidates are getting big banks' cash. As of this summer, the clear winners on that score were Clinton, Florida Gov. Jeb Bush and Rubio. These were the only three candidates who as of June has pulled in at least six figures from big bank executives, spouses of executives and employees. 

If you have questions about what the next president's policies mean for your bank's loan portfolios, the senior managers at loan sale advisory firm Garnet Capital Advisors have more than 100 years in combined experience in the field.