ISSUES + ACTIONS
2016:
The Candidates,
The Issues
Including the results of a survey of more than 300
banking and financial services executives in which they
prioritize what they hope a new president will address
and handicap the regulatory and political threats to their
business. Plus: Assessments of each of the ten leading
candidates, analyzing their positions on the
most important issues for financial services.
SourceMedia
Research
FOR RELEASE JANUARY 2016
AMERICAN BANKER
ISSUES + ACTIONS
NOTE
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2016 American Banker and SourceMedia. All rights reserved.
AMERICAN BANKER
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TABLE OF CONTENTS
THE ISSUES
Results from our survey of financial services executives
THE CANDIDATES
Jeb Bush
Ben Carson
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Chris Christie
16
Hillary Clinton
19
Ted Cruz
23
Carly Fiorina
26
John Kasich
29
Marco Rubio
32
Bernie Sanders
35
Donald Trump
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Financial Services
Perspectives on
The Presidential
Election
It is by now a universally acknowledged truth that the 2016 presidential
election has been the most volatile and unpredictable in recent memory.
By their own account, financial services executives care deeply about its
outcome, but uncertain about which outcome to hope for. Many of the
candidates have embraced populist ideas, with even Jeb Bush backing higher
capital requirements for banks while Sen. Bernie Sanders of Vermont has
proposed far more radical plans. Yet given the sheer number of candidates
still in the race, it can be confusing to compare and contrast where they stand.
In this research report, American Banker sets out to accomplish two goals:
to get a deeper understanding of the issues financial institutions care about
during this election and to provide a detailed, comparison-ready dossier that
identifies and explains where each significant candidate stands on banking,
tax and other financial issues.
To gauge the first, SourceMedia Research conducted an online survey of
more than 300 bankers in November and December. The survey asks bankers
to prioritize what they are hoping a new president will address as well as
handicap the greatest regulatory and political threats to their business.
The results were unambiguous. More than 90% percent said the presidential
election was important to the industry, with 41% assigning it extreme
importance and another 51% calling it somewhat important. Only one
respondent declared the race completely unimportant. (Figure 2)
While bankers agree the presidential race is critical, they view control of the
House and Senate matter as even more important to their agenda. Nearly twothirds of respondents said the Congressional races are more consequential to
the banking industry, compared to about a quarter who saw the presidential
election that way. (Figure 3)
AMERICAN BANKER
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The Candidates
The following section presents detailed profiles analyzing the campaigns of
the ten major candidates, including their policies, positions, and interactions
with the financial industry. For each candidate, we assessed issues in
banking, taxation, and health care and employee benefits. Specific issues
include: Too Big to Fail, Regulatory Relief, the CFPB, Crony Capitalism,
Fed Policy, Individual Income Tax, Capital Gains, Corporate Tax, Estate
Tax, and the Affordable Care Act. For online users, this section also contains
other relevant data and useful links to related content.
AMERICAN BANKER
ISSUES + ACTIONS
Hillary Clinton
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Crony Capitalism:
Clinton has backed a plan by Sen. Tammy Baldwin, D-Wisc. that would
restrict the the revolving door between government and the private sector.
The Financial Services Conflict of Interest Act would ban government
workers from accepting bonuses, known as "golden parachutes," from
their former corporate employers; expand a cooling-off period on lobbying
government agencies after leaving the public sector to two years; and require
financial regulators to recuse themselves from actions that would benefit a
former employer or client for two years.
The former New York senator has also been criticized for being a recipient
of significant Wall Street contributions, as well as the speaking fees she has
earned for giving speeches to firms like Goldman Sachs. During the primary
debate on Jan. 17, Sanders claimed Clinton had earned more than $600,000 in
speaking fees from Goldman.
Clinton did not rebut the claim, but has generally deflected criticism by saying
she has won over many diverse fans, including some on Wall Street, working
in downtown Manhattan to help with rebuilding efforts after the 9/11 attacks.
CFPB:
Clinton has been a fierce advocate for the Consumer Financial Protection
Bureau, opposing any changes to its structure or its funding. In October, she
wrote a letter to House Democrats urging them to vote against a bill that would
have replaced the agencys single director with a five-person commission.
If this bill passes, consumers primary advocate in the U.S. government
would have to fight with one hand tied behind its back, Clinton wrote.
Perhaps thats exactly what Republicans and their corporate allies want. This
legislation is just the latest salvo in the relentless Republican war to defund
and defang the CFPB.
The letter makes it clear that if elected president, Clinton will oppose any
significant changes to the CFPB.
Fed Policy:
Clinton has not spoken in depth about monetary policy.
TAX PROPOSALS
Although Clinton has not announced a comprehensive tax plan similar to the
reform proposals of some of her would-be Republican opponents, she has
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spelled out a change to the way capital gains would be taxed for those earning
$400,000 or more a year.
Her plan has won praise from progressive economists for its effect on
curtailing tax subsidies for the wealthy and encouraging investors to hold
investments for longer terms, but those who oppose it say it might encourage
investors to divest their holding earlier than they would otherwise.
Individual income tax: No position taken.
Capital gains: To counter what Clinton calls quarterly capitalism, she
has proposed revision to the capital gains tax: For top earners ($400,000
or more per year) the top rate on capital gains would remain at 39.6%
for a second year. The rate would then be lowered on a sliding scale over
the next four years. Investments held for six years would be taxed at the
current favorable capital gains rate. Clinton has also said she supports
raising taxes on carried interest.
Corporate tax: No position taken.
Estate tax: No position taken. She is reported to have used qualified
personal residence trusts as a tax planning/avoidance mechanism.
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Key Links:
Clinton Defends Wall Street Backing at Second Debate
Who Are Bankers Backing for President?
What Big Banks Are Giving to Presidential Candidates
Four Takeaways for Banks from the First Democratic Presidential Debate
Democrats Clash Over TBTF at First Presidential Debate
Clinton Offers Incremental Vision of Wall Street Reform
An Annotated Guide to Clinton's Wall Street Reform Plan
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Ted Cruz
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TAX PROPOSALS
Individual income tax: Cruzs plan would abolish the IRS and replace the Tax
Code with a simple flat tax, with the current seven rates of personal income
tax collapsed into a single rate of 10%. The first $36,000 of income would
be tax-free for a family of four. The Child Tax Credit would remain, and an
expanded Earned Income Tax Credit would undergo anti-fraud and promarriage reforms. Charitable contribution deductions and mortgage interest
deductions would remain.
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Capital gains: Capital gains would need no special treatment under the flat
tax proposal.
Corporate tax: Replaced by a business flat tax at a single 16% rate. The payroll
tax system would be abolished while maintaining full funding for Social
Security and Medicare.
SIGMABLEYZER $32,400
$21,600
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AMERICAN BANKER
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Bernie Sanders
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Crony Capitalism
Sanders attacked Clinton at the second Democratic debate in November over
her significant funding from banking industry employees.
Candidates who receive "huge amounts of money" from big industries often
say, " 'These campaign contributions will not influence me. I'm going to be
independent,' " Sanders said, calling Clinton's defense "not good enough."
Sanders continued his attacks during the Jan. 17 debate with Clinton,
criticizing the speaking fees she has received from Goldman Sachs, among
others.
The Vermont lawmaker held up Goldman as what's wrong with American
politics, noting that two recent Treasury secretaries Robert Rubin and
Henry Paulson came from the firm. "If elected president, Goldman Sachs is
not going to bring forth a secretary of treasury for a Sanders administration,"
Sanders said.
CFPB
Sanders has not talked in depth about the CFPB.
Fed Policy
Sanders has heavily criticized the Federal Reserve, arguing it has been
effectively captured by the banks. In his January speech, Sanders called for
board members of the 12 regional Fed banks to be nominated by the U.S.
president and confirmed by the Senate. He has said that no big-bank executive
should serve on the board of the main Federal Reserve or its regional banks.
Sanders has also sharply criticized the transparency of the Fed, supporting
calls by conservatives to allow the Government Accountability Office to
audit the central bank annually. He has also said that full, public transcripts
from Federal Open Market Committee meetings should be released after
six months, rather than after five years. "If we had made this reform in 2004,
the American people would have learned about the housing bubble well in
advance of the financial crisis," Sanders said in a New York Times op-ed.
Sanders has also criticized the interest the Fed pays on bank reserves,
suggesting it is a big bank giveaway. It "keeps money out of the economy and
parked at the Fed," he said.
Instead, he said the Fed should charge banks a fee "that could be used to
provide affordable loans to small businesses to create hundreds of thousands
of jobs."
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TAX PROPOSALS
Individual income tax: Sanders has said he would expand Social Security by
lifting the cap on taxable income above $250,000.
Capital gains: Sanders would increase the Net Investment Income tax to 10%.
He has stated that he would raise taxes on dividends and capital gains.
Corporate tax: No official position taken, though his Web site says he would
stop corporations from shifting profits overseas to avoid U.S. income taxes.
Estate tax: Sanders would increase the top estate tax rate to 65%, and lower
the estate tax exclusion to $3.5 million.
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AMERICAN BANKER
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Donald Trump
The New York real estate mogul has had a major impact on
the presidential race because of his unconventional style and
controversial views.
Unlike traditional campaigns, Trump has eschewed providing
much in the way of detailed policy objectives except in a few
areas, like immigration. In addition, he has one of the more
comprehensive tax proposals among the candidates.
Following are his views on key issues.
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Clinton and Ted Cruz, for accepting money from firms like Goldman Sachs.
During the debate on Jan. 17, Trump noted that Cruz had not properly
disclosed a loan from Goldman (where Cruz' wife works). Campaigning in
Iowa later the same week, Trump savaged Cruz, his closest competitor in the
Republican race, over the issue, arguing Cruz hid the loan.
"He didn't do it purposely because what he wanted to do is say, 'I will protect
you from Goldman Sachs, I will protect you from CitiBank... and I'm going
to protect you from these banks.' And then he's borrowing from the banks,"
said Trump. "And, by the way, he's got personal guarantees, and he's got
low-interest loans, all low-interest. And now he's going to go after Goldman
Sachs? It doesn't work that way. Goldman Sachs owns him. Remember that,
folks: They own him."
Trump has also been critical of capital gains tax breaks for hedge funds and
other securities firms.
"They're paying nothing and it's ridiculous. I want to save the middle class," he
said in August on CBS's "Face the Nation." "The hedge fund guys didn't build
this country. These are guys that shift paper around and they get lucky."
CFPB:
Trump has not discussed his plans for the CFPB to date.
Fed policy:
Trump has sharply criticized current Fed Chairman Janet Yellen. Echoing
criticism from other GOP presidential candidates, Trump has accused Yellen
of purposely keeping interest rates low for political reasons.
Janet Yellen is highly political and shes not raising rates for a very specific
reason, Trump said in a speech on Nov. 3. Because Obama told her not to
because he wants to be out playing golf and other things a year from now
and he wants to be doing other things and doesn't want to see a bubble burst
during his administration."
He has said Yellen should have raised rates earlier, but that when she does so
in the near future a lot of bad things are going to happen.
TAX PROPOSALS
Of all the candidates, Trump has one of the most detailed tax proposals.
Individual income tax: Trumps plan would consolidate seven brackets
into four of 0%, 10%, 20%, and 25%. The top rate would be lowered from
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not fair to the people that have been paying in for years and now all of the
sudden they want to be cut, he told a GOP summit in April.
Supports a low minimum wage. Having a low minimum wage is not a bad
thing for this country, he said.
Links:
DEUTSCHE BANK AG
$250
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