Democratic presidential nominee, U.S. Vice President Kamala Harris speaks during a presidential debate hosted by ABC as Republican presidential nominee, former U.S. President Donald Trump listens, in Philadelphia, Pennsylvania, U.S., September 10, 2024. REUTERS/Brian Snyder/File Photo
Wall Street Executives Cautious About Supporting U.S. Presidential Candidates
As the U.S. presidential election approaches, many Wall Street executives express reservations about endorsing either Democratic candidate Kamala Harris or her Republican rival, former President Donald Trump. Concerns center around the potential economic consequences of each candidate’s policies, with fears of instability under Trump and apprehension about Harris leaning too far left, particularly on regulatory issues.
Diverging Concerns Over Economic Policies
Despite a history of implementing Wall Street-friendly policies during his first term, Trump’s current platform has raised concerns about economic and policy instability. His populist and protectionist stances, coupled with a renewed focus on import tariffs, are seen by many executives as potentially inflationary and damaging to the economy. Although Trump promises tax cuts and deregulation, many in the financial sector worry that the economic benefits could be offset by ballooning deficits and trade disruptions.
On the other hand, Kamala Harris, who became the Democratic nominee after President Joe Biden exited the race in late July, presents a less certain option for many executives. While she is viewed as competent and capable of handling economic matters, her stance on regulatory issues, particularly her role in continuing Biden’s crackdown on Wall Street practices, raises concerns about further regulatory challenges. Executives are keen to learn more about her economic platform, but many feel that Harris has yet to provide sufficient details to alleviate their uncertainties.
Key Figures and Divided Support
Several high-profile Wall Street figures, such as Bill Ackman, John Paulson, and George Soros, have already declared their support for a candidate. However, a large portion of senior executives remain undecided, weighing the potential impact of each candidate’s policies on both the economy and legal and democratic institutions. According to Bruce Mehlman, a partner at the bipartisan lobbying firm Mehlman Consulting, there is widespread uncertainty about Harris, while most expect Trump to continue with his populist, protectionist, and deregulatory agenda.
Trump’s Economic Proposals and Industry Reactions
Trump’s campaign promises include tax cuts and regulatory rollbacks, similar to his first term in office. However, his proposed import tariffs are a major point of concern for many on Wall Street. Executives worry that these tariffs could fuel inflation and undermine the positive effects of tax cuts. Trump campaign spokesperson Karoline Leavitt, however, emphasized that Trump’s economic policies in his first term “fueled growth, drove down inflation, and kept more money in everyone’s pockets.” Paulson, a billionaire investor and Trump supporter, also argues that the tariffs would generate revenue and help reduce the U.S. deficit.
Harris’ Economic Plan and Wall Street’s Perception
Harris’ economic proposals include tax hikes, which could dent corporate earnings and hurt stock markets, according to analysts. Nonetheless, these policies are seen as more sustainable in managing the deficit. Harris has not made extensive statements on financial policy, but her record as a prosecutor and her tough stance on banks suggest she would continue Biden’s efforts to regulate Wall Street and curb hidden banking fees. Her campaign has drawn endorsements from hundreds of economists and CEOs, although many executives are still unsure about her long-term approach to Wall Street.
Billionaire entrepreneur Mark Cuban, a Harris supporter, pointed out that stocks performed well when company taxes were higher, indicating that higher taxes might not be as detrimental to business as some fear. However, he noted that both candidates face challenges in passing their respective policy proposals.
Wall Street’s Political Donations and Preferences
According to data from OpenSecrets, as of August 21, donors from the securities and investment sectors have contributed $8.7 million to the Biden/Harris campaign, compared to approximately $3 million for Trump. These contributions, while significant, do not fully capture the financial support directed at each candidate, as many other channels exist for donations.
Concerns Over Stability and Democratic Institutions
Beyond economic concerns, several Wall Street executives have expressed worries about Trump’s potential impact on democratic institutions. Some executives are concerned about the policy volatility, personnel turnover, and the undermining of Federal Reserve independence that marked Trump’s first presidency. His role in the January 6, 2021, attack on the U.S. Capitol and his influence on the reversal of federal abortion rights have also alienated some within the financial sector.
Michael Bright, CEO of the Structured Finance Association, highlighted that many in the financial services industry are deeply divided, with some favoring Harris due to concerns about Trump’s impact on democratic institutions. Despite Trump’s broad appeal to populist voters, his approach to governance has left many on Wall Street uneasy.
Potential Cabinet Picks and Populism
Another point of concern for executives is the influence of populism on both candidates’ personnel choices. Harris is expected to continue working with Biden’s progressive agency heads, although some believe she may adopt a more moderate approach. Jon Henes, Harris’ national campaign finance chair in 2020, emphasized her pragmatism and commitment to sensible regulation.
In contrast, Trump’s populist leanings raise concerns that he might appoint inexperienced loyalists to critical positions in financial regulatory agencies. However, others suggest that Trump would likely rely on experienced industry figures, as he did during his first term, citing the recent appointment of Howard Lutnick, CEO of Cantor Fitzgerald, as co-chair of his transition team as a positive sign.
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