President Trump’s position in the polls and erratic style of presidential leadership has prevented bankers from placing their bets on his reelection.
Judging the two United States presidential candidates by their records, only one would appear to be the clear favorite of Wall Street and big business heading into November’s election.
President Donald Trump’s first term record includes some of the biggest tax cuts in history, deregulation and a generally pro-business and pro-stock market record overall.
On the other hand, Democratic challenger and former Vice President Joe Biden’s 2020 campaign platform includes a call for higher taxes on high income individuals and corporations, higher taxes on investments made by the wealthy, as well as a slew of new tax rules to prevent offshoring and tax-dodging by the biggest corporations.
It may come as a surprise, then, that in terms of fundraising alone, Wall Street is backing Joe Biden for president. The Biden campaign has raised more and more money from Wall Street banks and the financial industry more broadly, which is in turn giving less and less to President Trump’s reelection efforts.
Though support for President Trump may have dried up, this does not suggest a fundamental change of heart on Wall Street. Business-friendly candidates down the ballot, especially Republican candidates, are the favored recipients of Wall Street money in the 2020 election cycle.
Wall Street’s choice
Despite their respective records, Wall Street is now batting for Biden. At least, that is what fundraising figures show.
Data provided by the Center for Responsive Politics shows that in the final months of the presidential election, not only has Joe Biden’s campaign outpaced incumbent President Trump’s in overall funding, it has also outpaced the Trump campaign in funding from the banking industry.
In total, Biden’s campaign and connected fundraising groups have raised some US$3 million in funding from commercial banks and their workers, more than the US$1.4 million given to Trump.
In previous elections, banks and their workers have strongly leaned Republican. In 2012, banks and bankers gave US$5.5 million to Republican challenger Mitt Romney and only US$2 million to Democratic incumbent President Obama.
Data showing the overall funding provided to each candidate and their supporting groups paints a similar picture. CRP data also shows that the “Finance, Insurance & Real Estate” industry has donated some US$202 million overall toward Biden’s reelection efforts. This is significantly more than the US$84 million given to President Trump.
One-time big donors to Trump’s election efforts have also dried up. Billionaire and longtime friend of the President Ronald Lauder, Silicon Valley executive and investor Peter Thiel, and conservative financier Robert Mercer have all cut back on funding, despite having batted for the president in the past.
Thiel had previously given US$1.25 million to support Trump’s election efforts in 2016, one of few Silicon Valley executives to do so.
Biden’s more broad fundraising efforts have consistently outclassed those of the president. In September, former Vice President Joe Biden raised some US$383 million, with around US$203 million coming from online small-dollar donors.
As the two candidates entered October, Biden’s war chest for the final, crucial stage of the campaign was thus significantly larger than President Trump’s. Entering October, Biden’s campaign had some US$177 million on hand against Trump’s US$63 million.
This failure to level the fundraising playing field as the campaign draws to its close signifies a larger cash problem the Trump campaign is facing. The campaign has been forced to cancel tens of millions of dollars worth of ad buys in the final weeks of the election, with some predicting that the campaign could even run out of money before Election Day.
President Trump has stated that he himself would fund his campaign if needed, as in 2016. Despite the cash-crunch facing his reelection efforts, he has yet to do so.
Looking solely at the policy of the two candidates, it is hard to imagine why Wall Street and the financial industry more broadly would be so in favor of a Joe Biden victory.
As Matt Phillips writes for The New York Times, “unified Democratic control in Washington is not usually high on Wall Street’s wish list,” being associated with “increased regulation and taxes.” Biden’s economic platform seems to support these fears, in stark contrast to Trump, who has been an advocate of ever further tax cuts and deregulation.
Policy does not reveal all the answers, however. One GOP adviser who works for a former Trump donor in the finance industry told CNBC that “Wall Street craves policy, predictability and strong government institutions,” and that “Trump has delivered the opposite.”
As Vic Patel, founder of Forex Training Group, told TMS, “whether you are a Trump supporter or not, there’s no denying that his presidency has been plagued with chaos and uncertainty.”
No wonder that Wall Street should back Biden, then, as “markets react adversely to uncertainty more than anything else,” Patel explained to TMS.
One recent example of this lack of predictability includes the uncertainty surrounding negotiations for a second round of stimulus for the US economy.
In an evening of contradicting tweets and frenzied messaging, the president first suggested he had called off negotiations altogether, sending stocks falling, before walking back and claiming he supported more targeted bills, before again contradicting himself and arguing he supported a stimulus bill larger than had been proposed by either side during the negotiations. All this in the space of one evening.
With Biden well ahead in the polls and with many fearing the possibility of a disputed election, it makes sense that Wall Street, an industry built on attempting to ensure certainty and minimize risk, is consolidating funding for Biden.
As Shahab Jalinoos of Credit Suisse told The Times, “the cleaner the win, then the less likely that there is a disputed election.” If Biden wins by a large, indisputable margin and Wall Street can help to achieve that, that alone “tends to be a market positive.”
Wall Street support for Biden, however, has not translated into support for Democratic candidates down the ballot.
Though funding for congressional races in 2020 is nearly split even, with the banking industry giving US$14 million to Republican congressional candidates and US$13.6 million to Democratic candidates, Wall Street remains in favor of pro-business politicians, more often than not, Republicans.
For instance, the American Bankers Association, the banking industry’s top trade group, has run ads for 14 congressional candidates, including banking industry allies such as Senator Thom Tillis (R-NC) and Representative French Hill (R-AK), alongside moderate Democrats like Senator Chris Coons (D-DE) and Representative Josh Gottheimer (D-NJ).
Still, Democratic congressional candidates have largely been successful in increasing their Wall Street funding. In 2012, Democrats won just 29% of donations from the banking industry in congressional races. A 50/50 split in banking funding is thus a major increase for Democrats.
With the election in its final stages and with Biden still reporting a healthy lead in polling, a donation toward Donald Trump’s reelection efforts, despite his record in favor of tax cuts and deregulation, appears too risky a bet for Wall Street to follow through on.
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