Donald Trump won the race to be President of the United States and we are all wondering what the Trump presidency will look like. In the run up to the US Elections, Trump has promised a lot of things including tax cuts for middle-class families, proposing that no business would have to pay more than 15% of their profits in tax compared to the current 35%, eliminiating carried interest, reducing child care costs, proposed a 45% tarriff on goods from China, getting rid of Obamacare and tearing down some trade deals such as Trans-Pacific Partnership agreement.
What does the Banking industry expect from the US president?
“Overregulation is costing our economy as much as $2 trillion a year,” the incoming US president had said in August. Trump also said that overregulation cuts household wealth by about $15,000 dollars. The 45th president of the US wants to reform regulations, that he sees as wasteful and uncessary, which kill jobs and don’t improve public safety.
Streamlining financial regulation will benefit all businesses including fintech companies. Further more, Trump will not be alone in managing the government. It is expected that Trump will form his cabinet and appoint people who will lead government agencies.
“Last month, 52% of bankers in a recent poll by American Banker said Trump would be a better choice for the banking industry than Democratic rival Hillary Clinton, who received just 20% of support.”
One of Trump’s most visible economic advisers, Stephen Moore, an economist who founded the free market-promoting Club for Growth, acknowledged in an interview that there’s not a detailed plan but there is at least one clear agenda item that is likely to please bankers.
“We haven’t spent too much time on financial policy except for one issue and that is Dodd-Frank. Trump believes the 2010 financial reform law has had a very negative impact on small and community banks. The regulatory costs and compliance costs have contributed to a big consolidation to the industry.”
What does the FinTech industry expect from the US president?
Trump’s government will make extensive changes that would take some years to implement and it is currently unclear to state how these changes will affect the fintech market. In the past, Trump has been calling for the abolition of the Consumer Finance Protection Bureau (CFPB), a fintech-friendly US agency. This might be a blow for fintech companies, which have been asking for fintech-specific rules in order to streamline their way to compliance. However in the near future, we expect to see USA fintech investment slowing down. There is a lot of economic uncertainty that is sweeping across the country meaning fintech investors will be more cautious.
Trump has also repeatedly demonstrated his desires to reduce immigration to the United States. His immigration policies could be a setback for the country start-up scene, including financial technology, which sources many entrepreneurs and skilled workers outside the US.
“According to research by the National Foundation for American Policy, over 51 percent of US start-ups valued at more than $1 billion, including Oscar and Stripe, were founded by immigrants.”
Lastly, Republicans are opposed to net neutrality. Net neutrality refers to the handling of the internet as an unbiased utility that prevents internet service providers from favouring access based factors such as on pricing. Democrats support net neutrality; Clinton and Obama have both supported it. The current payments innovation is focusing on cross-border transactions, using cloud technology and blockchain to erase artificial borders and ease execution. The idea that there may be a digital wall made around the US would be terrible for fintech companies.
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