The Democratic candidates and their views on banking 

“The best lack all conviction, while the worst are full of passionate intensity.”
— William Butler Yeats

The Democratic primaries in 2016 did not involve a lot of discussion about banking issues. Bernie Sanders was on his Democratic Socialism crusade and said he wanted to break up the big banks. Hillary Clinton believed she was on her way to her eventual coronation and limited her proposals on banking to ideas she received from Sen. Elizabeth Warren, which amounted to tinkering with the Dodd-Frank Act.

Times have changed. The two dozen Democratic candidates are now fighting with each other on who can go hardest to the left and most of the proposals demonstrate a distinct hostility to the private sector.

Presidential candidates holding federal legislative office showed their antipathy toward banking last summer when they voted on S. 2155, a modest Dodd-Frank reform bill with some bipartisan support that was signed into law by Trump. Most of the legislation’s provisions were aimed at banks under $10 billion in assets. One section helped mid-sized banks from $50 billion to $250 billion.

The only candidate in the legislature to vote for S. 2155 was Sen. Michael Bennet of Colorado, one of 17 Democrats to support the bill in the Senate. Bennet’s presidential ambitions are probably doomed because he is out of step with progressives. Voting against the bill were Sens. Cory Booker, Kamala Harris, Amy Klobuchar, Bernie Sanders, Elizabeth Warren and Kirsten Gillebrand. When the bill got to the House, the no votes included Beto O’Rourke, whose father-in-law was a banker who has been involved in all of his campaigns.

Bernie may be losing ground to Warren and Harris but he is not backing off on his proposals against the financial services industry. He still wants to break up any bank above 3% of GDP, supports a financial transaction tax (supported by John Kerry in the 1990s) and wants major increases in estate and capital gains taxes.

His latest idea, brought to him by his former campaign volunteer, Alexandria Ocasio Cortez, is to cap all credit card interest rates at 15%. Don’t be surprised if he doesn’t adopt another AOC proposal to turn all post offices into consumer banks that can take deposits and make loans.

If you like Elizabeth Warren’s brainchild, the Consumer Financial Protection Bureau, the “Politburo” of consumer and small business lending, you’ll love her plans for the rest of the economy. She has become a policy paper machine full of ideas to make the private sector more progressive. Her supporters wear T-shirts saying, “She Has A Plan For That.”

One idea is to require all companies that reach $1 billion in revenue to obtain a federal corporate charter, make union members 40% of their board and require a two-thirds vote on executive salaries, dividends and political contributions. One can envision that this will lead to the inefficient atomization of many companies and, for those that cannot break up or stop growing, trade-offs made between SEIU/CWA/AFL-CIO and equity holders that will distort and impede economic growth and job creation.

In addition, Warren wants a financial transaction tax as well as the return of Glass-Steagall. For good measure, she also would like jail time for executives whose companies pay fines.

Harris and Klobuchar have criminal prosecution backgrounds. Harris was San Francisco DA and California AG where she engineered a $25 billion foreclosure settlement against the nation’s five largest mortgage firms. Klobuchar was a federal prosecutor. They both support Dodd-Frank. Klobuchar wants to prosecute payday lenders.

Cory Booker supports Dodd-Frank and has introduced legislation to ban overdraft fees on debit cards and ATM transactions and limit overdraft fees on checks and recurring payments.

Joe Biden is looking more moderate each day. He supports Dodd-Frank as is and does not support any health care proposal that would do away with private health insurance. The real question is whether the newly energized left and a motivated millennial bloc will allow him to become the Democratic nominee.

None of this means that these radical ideas are sure to become law if any of these folks can defeat Trump. Regardless of who wins the presidency, the House will likely keep a relatively narrow majority presided over by Nancy Pelosi, and the Senate will remain narrowly controlled by Republicans or Democrats with fewer than the 60 votes needed to pass bills.

A Democratic president, however, will bring a new Treasury secretary as well as new heads of Justice and HUD. Trump agencies will be there for a few more years but bankers need only to remember the Obama years to imagine how a new regime would treat the industry.