Implications of the 2016 Election for Banks, Systemically Important Financial Institutions and Their Investors

October 11, 2016

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process. History suggests, however, that the policies of candidates can be a predictor of likely regulatory trends.

At the very least, a new Democratic administration, along with the status quo in the House and Senate, would, for better or worse, signal some sense of continuity of current regulatory policies. That continuity would appear to include recent policies that may reflect the recommendations of the Federal Reserve, OCC and FDIC that Congress repeal authorizations of financial holding companies provided in 1999 in the Gramm-Leach-Bliley Act to, among other things, engage in merchant banking and commodities investment activities. Those agencies also recommend the repeal of an exemption that permits corporate owners of industrial loan companies to operate outside of the federal regulatory and supervisory framework applicable to other corporate owners of insured depository institutions.

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