What a Joe Biden win could mean for financial policy

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By Pete Schroeder and Katanga Johnson

(Reuters) – Democrat and former US Vice President Joe Biden was declared the winner of the US presidential election by several major television networks on Saturday, beating Republican President Donald Trump, who took a pro-industry stance on regulation.

While Biden is unlikely to prioritize crackdown on the financial industry, he is expected to take a stricter line than Trump and his former boss, President Barack Obama.

Biden has turned to former derivatives market regulator Gary Gensler, who has a reputation for being tough on Wall Street, to work out a transition plan for oversight of the financial industry.

These are some of the key areas your administration and agency selections are likely to focus on.

THE COMMUNITY REINVESTMENT LAW

The pandemic has shed light on America’s wealth and racial inequalities, prompting Democrats to use a variety of political levers to address the issues. These include the Community Reinvestment Act of 1977, a fair lending law that gives banks regulatory points for making loans to low-income communities.

Biden has made a commitment in campaign materials to expand the rules to other sectors, including mortgage and insurance companies.

HOUSING FINANCING

Addressing the nation’s affordable housing crisis is a priority for Democrats and Biden. A Biden administration would likely try to stop a Trump plan to free home finance giants Fannie Mae and Freddie Mac from government control, a move Democrats worry that the cost of mortgages for Americans will rise. middle and low income.

Biden has also pledged to review Trump’s housing regulator rules that are meant to protect against lending behaviors that disproportionately adversely impact racial minorities or other protected groups.

CONSUMER PROTECTIONS, CREDIT REPORTS

Biden has called for a strong Consumer Financial Protection Bureau (CFPB), created after the 2009 financial crisis to ensure banks don’t take advantage of consumers. The agency has been less aggressive under Trump, and Biden has backed stricter oversight of consumer loans and called for cracking down on discriminatory lending practices.

Among Biden’s most striking policy proposals is the creation of a public credit reporting agency to compete with companies like Equifax and TransUnion. According to Biden’s campaign materials, the new agency would aim to “minimize racial disparities” in credit reports after some studies found the disadvantages of the current system and excluded minorities.

CLIMATE CHANGE RISKS

Influential Democratic lawmakers and policy experts are pushing for public corporations to be required to disclose the risks of climate change to their businesses and to feed those risks into the financial regulatory system. Biden has called for swift action to address climate change, and policy experts believe his agency’s picks will pursue these ideas.

BANKRUPTCY REFORM

In a radical policy change, Biden adopted a bankruptcy reform plan pushed by consumer advocate, Democratic Sen. Elizabeth Warren, whom he previously opposed as a senator. The proposal would make it easier for Americans to pursue bankruptcy and protect assets like homes and cars from debtors during the process. However, such a plan would require the passage of legislation that would be unlikely without a Democratic majority in the Senate.

POSTAL BANKING

Biden has voiced support for a long-standing progressive policy to get the US Postal Service to provide basic banking services. Progressives say the plan would reduce economic inequality by allowing “unbanked” Americans to access affordable credit and banking services, and avoid predatory lenders and expensive check cashing services.

The banking industry opposes the creation of a taxpayer-funded competitor and is likely to oppose the plan.

PAYMENT LOANS, DEBT COLLECTION

Democrats, including Biden, lamented in July when the CFPB removed a key provision in a payday loan function, first drafted by the Obama-led CFPB, that would require payday lenders to make sure of that consumers had the ability to pay.

The lenders said the provision was so onerous that it could kill their business.

Similarly, consumer groups have criticized the agency’s recent debt collection rule that they say would allow debt collectors to harass consumers with unlimited text messages and emails. A Biden administration is likely to try to rescind or rewrite those rules.

(Reporting by Pete Schroeder and Katange Johnson in Washington; Edited by Nick Zieminski, David Gregorio, Peter Graff and David Holmes)

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