US banks have a lot riding on the outcome of Election Day even if they’re not 100% sure how either candidate might treat their industry.
The “knee-jerk reaction,” according to KBW analyst Chris McGratty, is that a Donald Trump victory will mean a return to looser regulation of banks and more leniency in approving the sort of corporate mergers that produce big profits for Wall Street giants.
A Kamala Harris win, on the other hand, may mean that a more aggressive period of overseeing the nation’s largest financial institutions under President Joe Biden will continue.
“In my investor conversations, it definitely feels like people are pricing in Trump,” McGratty told Yahoo Finance. “So initially, if the election goes to Harris I would think banks would sell off,” he added.
The country’s largest lenders have had a great year thanks to the economy’s resilience during a period of elevated interest rates and a rebound in their investment banking and trading operations. The hope is next year could also turn out well, if lending and Wall Street dealmaking churn higher while interest rates fall.
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