Displaying items by tag: biden
Any way you slice it, 2021 seems like it will be a good year for munis, and not because the financial condition of municipalities is so great (it isn’t!). One of the main reasons why is the incoming administration and Congress. Between Biden’s stimulus plans and the now Democrat-controlled Senate, the odds for large amounts of local and state financial support from the federal government are quite high. This part of equation is well understood, but there is a second aspect of the Democrats’ plans that will also be beneficial to munis: they plan to raise taxes on the wealthy. Higher taxes on the wealthy would directly increase demand for munis bonds, which means they should have a tailwind this year.
FINSUM: The part about increased taxes and how it drives muni demand has not been discussed enough. We think this is an excellent angle and combined with financial stimulus, should set up a couple years of smooth sailing.
The general understanding among wealth management regulatory experts has been that the Biden administration was not overly likely to overturn Reg BI. However, that faith might be waning in the face of some developments out of Congress. The House Financial Services Committee, led by Maxine Waters, has been adamantly pushing for Biden to completely overturn the rule and bring in new legislation. To this point, most thought Biden would simply install a new SEC chair that would become a stronger enforcer of the rule rather than trying to write an entirely new one. And with the name of former prosecutor Preet Bharara as the rumored next head of the SEC, the focus on enforcement makes sense.
FINSUM: We wonder to what extent Biden might reward his Democratic allies in Congress by pushing an agenda that writes an entirely new rule. On the one hand, it does not appear too farfetched, but on the other, it seems Reg BI may be way down the priority list given the pandemic.
Gold has been hurting recently, with prices currently around $1,800 after some strong gains over the course of 2020. The big question is where gold is headed now that the vaccine is rolling out and a new administration is coming in. See the full story here on our partner Magnifi's site.
Joe Biden and the Democrats’ plan for wealth management regulation is becoming clearer as his inauguration date draws nearer. One big question on the industry’s mind is whether Biden will completely replace Reg BI with an entirely new package. According to former SEC lawyers, that seems highly unlikely. The reason why is that doing so would take an act of Congress, a high bar. Rather, what seems much more likely is that a new SEC chief is appointed an enforcement is tightened very considerably, with the emphasis moving to strict “by the letter” enforcement rather than principles-based enforcement.
FINSUM: This would be a big change. One of the aspects that really set the Trump administration era of enforcement apart was that it would focused on following rules in principle more so that “to the letter”. While this was not unique to wealth management, it was a definite change of pace that now seems likely to reverse.
As Biden takes the White House, all eyes in the wealth management industry are on regulations. Biden seems likely to take a much harder line on industry regulations than Trump did. The most focus is on the DOL, as the Biden team has made it clear that a “true” fiduciary rule is part of the agenda. No one quite knows if that will come from a tweaking of Reg BI or a restoration/update of the original DOL rule. One thing that has caught the attention of the industry is that Bernie Sanders appears a top candidate to take over the DOL, which could bring his unique approach, and almost certainly a new hardline fiduciary rule.
FINSUM: Bernie Sanders taking the helm at the DOL would be very ominous for wealth management. That said, one thing that has been clearly broadcast by the administration is that the DOL’s first agenda will be on healthcare (because of the pandemic) and secondly, it will be on raising the minimum wage to $15.