The Future of Banking and Finance Under a New Federal Administration
As the banking and finance industry braces for changes under the incoming federal administration, experts are cautiously optimistic about potential gains. President-elect Donald Trump’s proposed policies, which include a lower-interest-rate environment and lighter regulatory oversight, could create a favorable landscape for businesses. However, industry leaders caution that while some proposals may be beneficial, others could pose challenges, and the timeline for implementation remains uncertain.
Optimism Among Banking Leaders
In the Rochester/Finger Lakes region of New York, managers at Canandaigua National Bank & Trust (CNB) express a positive outlook regarding the new administration’s impact on business. Brendon Crossing, senior vice president and group manager for the commercial services team at CNB, believes that Trump’s policies could stimulate business growth. He notes that prior to the election, many business owners hesitated to move forward with projects due to high interest and construction rates. However, since the election, interest rates have begun to trend downward, which Crossing anticipates will lead to increased demand for loans in the commercial sector.
Kevin DiGiacomo, also a senior VP at CNB, echoes this sentiment, emphasizing that while the first few months of the new administration may focus more on discussions than actions, the potential for tax cuts and deregulation could ultimately benefit businesses. He advises clients to remain flexible and ready to adapt as policies evolve.
Tax and Regulatory Policies: A Double-Edged Sword
Mary Ann Scully, dean of the Sellinger School of Business at Loyola University of Maryland and a former banker, highlights the uncertainty surrounding the new administration’s tax and regulatory policies. She points out that extending provisions from the 2017 Tax Cuts and Jobs Act (TCJA) could create a stable environment for businesses. While tax cuts generally provide short-term benefits, Scully warns that they could exacerbate the existing budget deficit, leading to long-term economic challenges.
Deregulation, on the other hand, could foster increased mergers and acquisitions in the banking sector, which have been limited in recent years. However, Scully raises concerns about potential tariff increases and deportation plans, noting that these could adversely affect the cost of goods and the availability of labor in key industries like agriculture and construction.
The Role of Patience and Preparation
As businesses navigate this transitional period, Jess LeDonne, director of policy and legislative affairs at The Bonadio Group, emphasizes the importance of patience and preparation. With the Republican administration’s proposals still in the early stages, LeDonne advises organizations to avoid hasty reactions. While some proposals may be advantageous, others could present challenges, and the slim Republican majority in Congress may complicate the passage of ambitious initiatives.
LeDonne highlights that regulatory and compliance changes are expected to be a priority for the new administration, potentially easing burdens on the financial sector. However, she cautions that the goal of keeping inflation in check may lead to continued high-interest rates, which could impact businesses’ borrowing costs.
Implications of Tariff Increases and Supply Chain Management
One area of significant concern for businesses is the proposed tariff increases. LeDonne notes that the president-elect may have more unilateral power to implement these changes, which could lead to increased costs for imported goods. Companies are advised to closely examine their supply chains and sourcing strategies, as the financial implications of tariffs could be substantial.
Additionally, businesses should remain vigilant regarding potential changes to corporate tax rates and federal programs related to research and development, as these could be affected by the new administration’s budgetary priorities.
Navigating Uncertainty in the Business Landscape
As the banking and finance industry prepares for the changes ahead, experts recommend that small- to mid-sized businesses focus on risk management and continue to prioritize customer service and employee relations. Scully advises businesses to "stay the course" and maintain a commitment to developing quality products and services, even amid uncertainty.
The immediate market reaction to the election results has shown a preference for U.S. investments, particularly in small-cap stocks and regional banks. However, J.P. Morgan Private Bank’s 2025 economic outlook warns that pro-growth initiatives could also lead to higher inflation and wider budget deficits, underscoring the complexity of the economic landscape.
In this evolving environment, businesses must remain adaptable and informed, ready to respond to both opportunities and challenges as the new administration’s policies take shape. The coming months will be crucial in determining how these changes will ultimately impact the banking and finance sector, as well as the broader economy.
