President Joe Biden took office with pressing policy priorities to address and the potential to enact much of his agenda, but it won’t be easy. His first 100 days, expected to be dominated by vaccines and another COVID-19 relief package, are providing an early test. The new president also will be looking to incorporate climate change and social justice considerations more deeply into policy- and rule-making processes across the federal government — a so-called whole-of-government approach — while attempting to restore a sense of unity into a partisan political environment.
Financial services may not be at the top of Biden’s policy agenda — at least not directly — but embedding his priorities in governmental decision-making processes will be felt. We expect a general reversal of the regulatory easing of the last four years, with greater scrutiny in areas like consumer and investor protection, housing finance and financial inclusion. Financial institutions (FIs) also will be asked to make the climate a bigger part of risk management and disclosures. Agency appointments and the regulatory and supervisory priorities rule-making that follow will reflect those themes.
In the months ahead, we will be monitoring the new administration’s progress on achieving its priorities and how they will impact FIs. We also will be watching how the debate on tax policy evolves and what it might mean to the industry.
The new president is employing a whole-of-government approach that makes each priority central to decision-making.
His four overarching priorities across departments and divisions are:
- Mitigating COVID-19’s health impacts. This includes expanded free testing, accelerated vaccine production and distribution, and financial support for local efforts to combat the pandemic.
- COVID-19 relief and economic support. Biden’s $1.9 trillion American Rescue Plan (ARP) calls for additional $1,400 direct payments to individuals, expanded unemployment benefits, aid to state and local governments and schools, rental assistance and other measures to help families and communities endure the pandemic’s financial impact. The administration aims to have the bill signed by March 14, when existing pandemic unemployment programs are scheduled to expire.
- Climate change and clean energy. Expect regulatory tightening around emissions and incentives for green energy programs. Biden has already ordered a "climate review" of more than 100 orders and regulations across the government. The president hopes to use climate’s threat as a catalyst for a new clean economy.
- Social justice and racial equity. Biden’s policies will include a focus on consumer protection. For FIs, racial equity and financial inclusion efforts will take a higher profile.
Biden’s agenda also includes his "Build Back Better" plan, which calls for funding job creation, infrastructure spending and green energy initiatives. The proposal, which includes new or expanded incentives for retirement savings and affordable housing, and other Democratic priorities, is expected to dominate the legislative agenda in the second half of the year. With a price tag into the trillions of dollars, it will likely be accompanied by a push to raise taxes.
Impact on financial services
Financial services legislation is unlikely — the industry appears to have weathered the pandemic’s disruption relatively well. Even so, and with many other issues requiring immediate attention, the president’s agenda will have a significant impact on FIs.
COVID-19’s health risks touch FIs as employers and service providers. Institutions also will likely be expected to play a significant role helping to facilitate the next relief package, with the conduct and operational challenges that entails.