Which presidential candidate will be better for fintech over the next four years?
Of all the issues roiling the presidential campaign in 2024, it is safe to say that the future of fintech is not among the top two or three. Nevertheless, it is also safe to say that the fintech industry under a Trump administration will face different challenges and opportunities than it would under a Harris administration.
Let’s first look at how the policies of Republican candidate Donald Trump might impact fintech and financial services more broadly.
“The Crypto President”
Whether or not “they” are calling Donald Trump “The Crypto President,” the man who once called Bitcoin “a scam” has since had a change of heart when it comes to cryptocurrencies.
The now-famous quote — “You know, they call me the crypto President …” — comes from an ad the former president ran in August marketing his fourth series of non-fungible token (NFT) digital trading cards. Earlier this year, Trump suggested creating a “strategic national bitcoin stockpile” with the goal of ensuring that America is the “crypto capital of the planet.”
While not prominently noted on the Trump campaign’s website, the Republican party platform with regards to digital assets includes a reference to the opposing party’s “unlawful and unAmerican Crypto crackdown” on the one hand and opposition to “the creation of a Central Bank Digital Currency” on the other. The party, whose positions are likely identical to those of the former commander-in-chief, also pledges to defend the right of American citizens to mine Bitcoin and to self-custody of their digital assets.
Republican re-deregulation
The idea of a Republican president embracing deregulation in general has been baked into voter perceptions of the party since the 1980s, at least. And as Jamie Dimon, Chair and CEO of JPMorgan Chase, rails against regulators (“if you’re in a knife fight you better damn well bring a knife,” he recently told attendees at the American Bankers Association Convention), the question is whether the Trump administration is likely to supply Mr. Dimon with the silverware he seeks.
Looking again to the RNC platform, the most specific reference to deregulation is a pledge to “reinstate President Trump’s Deregulation Policies” as part of the former president’s plan to “Cut Costly and Burdensome Regulations.” If past is prologue, then Trump’s signing of the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018 could provide some clues. Here, we find initiatives to expand access to mortgage credit, incentivize capital formation, and provide additional protections for student borrowers.
Do tax cuts + tariffs = inflation?
Aside from tax cuts, the most noteworthy element of Trump’s economic plan is his embrace of tariffs on goods manufactured outside of the United States. In fact, the former president has gone so far as to suggest that the income tax be eliminated in favor of his new, tariff-based approach to funding government operations.
And while this is extremely unlikely, the combination of Trump’s tax cut proposals and his enthusiastic attitude toward tariffs could ironically pave the way for an economy that is more vulnerable to inflation. This could lead, ultimately, to higher interest rates and tighter monetary policy compared to where the American economy is at the end of 2024.
You don’t have to be a long-time, fintech veteran to remember the devastating impact that higher borrowing costs can have on the startup community — or its financiers. And it is hard not to fear that a “double-dip” resumption of these conditions could leave startups and their backers in an even more constrained and risk-averse position than they have been this year.
Now let’s look at how the policies of Democratic candidate Kamala Harris and how they might impact the fintech industry.
From big banks to junk fees
A story in today’s Washington Post highlights Vice President Kamala Harris’s tenure as California attorney general and her role in strengthening a “multibillion dollar mortgage settlement” with major banks in the wake of the Great Financial Crisis. Not only is this a significant component of Harris’s resume, it is also a tale she eagerly tells while on the campaign trail.
It is worth noting that, for all the fighting words, most observers expect the Vice President to be more business-friendly than the notoriously pro-labor current President. Nevertheless, it is easy to see a Democratic administration looking to fortify and even extend a range of consumer protections in financial services.
That said, the emphasis from the campaign is less about bashing the big banks and more about addressing the smaller annoyances of everyday consumer life. Under the banner of ‘Lower costs by protecting consumers from fees and fraud,’ for example, the Harris campaign pledges to ban junk fees across the board and make it easier to cancel unwanted subscriptions.
Economies of opportunity
The Harris campaign has touted its concept of an “Opportunity Economy,” in which the federal government plays an active role in helping individuals, families, small businesses, and communities maximize their ability to thrive in a capitalist economy. This includes launching a small business expansion fund that leverages low- or zero-interest loans to help entrepreneurs grow their businesses and create jobs. This “Opportunity Economy” also mandates that the federal government commit to allocating a third of its contracts to small businesses, reducing the number of excessive occupational licensing requirements, and helping small businesses cut bureaucratic red tape and file taxes more easily.”
The Vice President’s plan does target startups specifically, setting a goal of 25 million new business applications over the next four years, and a tenfold expansion of the startup expense deduction from $5,000 to $50,000. Additionally, Harris’s campaign calls for an “America Forward” tax credit designed to incentivize investment and job creation in “key strategic industries” as well as “scaling up and making permanent” the National Artificial Intelligence Research Resource. The latter is a shared research infrastructure that provides startups and researchers with access to computing power, data, and analytics tools to support innovation in AI.
Housing and the “sandwich generation”
Two areas of the Vice President’s agenda — the pledge to build more housing and the goal of making both day care and elder care easier and more affordable for caregivers — could have interesting impacts on financial services and fintech. The former, which includes a plan to build three million additional homes and provide $25,000 in down payment assistance, could send a jolt through the financial services industry that would impact bankers, lenders, and mortgagetechs alike. The campaign is also championing tax credits to encourage homebuilders to build affordable homes and a Neighborhood Homes Tax Credit, which supports “investment in homes that would otherwise be too costly or difficult to develop or rehabilitate.”
The latter proposal — to ease the financial burden of Americans who are caring for both young children and elder parents — does not make a prominent appearance in the Harris campaign’s website. But those who have heard the Vice President speak in recent weeks are familiar with the challenge, which she describes as the fate of the “sandwich generation.” The Harris campaign has suggested a number of remedies — from Medicare expansion to boosting the pay of homecare workers. What is interesting from a fintech perspective is the idea that resources devoted to eldercare in particular could draw attention to the work of fintech innovators from Golden, to Eversafe, to Bereev that specialize in providing financial services to seniors and those who are caring for them.
Many of these plans from the Harris campaign will require the approval of a Congress that could easily remain split between the two parties. While that may limit the scope of even the successful initiatives, it would provide the kind of balance (or, if you prefer, gridlock) that has often accompanied strong economies. And that, in itself, would be a good thing not a bad thing for fintech and financial services.