The Trump effect on big banks — particularly their stock prices — has gotten an awful lot of play in the last week or two. But more quietly, America's small banks and small bankers have been gearing up to get excited for the forthcoming changing of the guard.
Bankers like Rusty Cloutier who runs a small bank in Lafayette, La and who has been nearly an unwavering Trump booster.
“My customers are very hard-working people,” said Mr. Cloutier, the president of MidSouth Bank. “They work in the oil fields and they hear they are racist, and they just got tired of it being slammed in their face.”
He added to The New York Times reporters interviewing him, “Tell your editors that they need to run a headline that says ‘Main Street Won.’”
Big banks, however, on Wall Street, have been (by the numbers) the big winners so far. Bank of America and JPMorgan Chase are seeing stock prices at their highest levels in years. The surge was strong enough that even Wells Fargo managed to get caught in the current and see its stock price soar (despite being recently beset with an account openings scandal).
Banks could stand to benefit from the looser regulations and higher interest rates that are predicted if the Trump fiscal stimulus program succeeds in reviving inflation some. Higher interest rates mean more valuable holdings for banks — and wider margins on loss.
But the enthusiasm at this point comes with an asterisk, as the full scope of President-elect Trump's plans for the banking sector when it comes to regulation has not been explained in any great detail.
There is also the small matter of future president Donald Trump's somewhat inconsistent statements on banking throughout the campaign. He has called for the destruction of Dodd-Frank for its tendency to kill profits in its attempts to reign in risk. But he has also railed against Wall Street and its excesses for keeping down main street America and its workers.
Community bankers see this dual view on Trump's part as a big opening — since limiting regulations on banks with less than $10 billion in assets could be a massive boon. Meanwhile, if Trump is hard on the big Wall Street banks, that also comes at the benefit of their smaller competitors.
Roughly 84 percent of community bankers supported Mr. Trump, according to a poll that the industry’s trade group conducted after the political conventions this summer.
“I didn’t have any Trump signs in my yard,” said Tim Zimmerman, president of Standard Bank, which operates in communities outside Pittsburgh. “But I want the bank to do well and to be able to help people in the community. And I can’t do that if things go the way they are going.”
About half of the nation’s deposits are held by just a handful of mega-banks. Those banks' leaders broke overwhelming for Trump's opponent Hilary Clinton on concerns that Mr. Trump was a loose cannon who could destabilize the economy.
But a soaring stock market has a way of changing hearts and minds — and big banks began talking about the upside of a Trump presidency, mostly described in terms of a "supportive market." Said banks are, notably, not advocating for the repeal of Dodd-Frank, as they have already spent hundreds of millions complying with it. Nor do they necessarily want a less powerful consumer protection agency, as big banks kind of like the way they come down on (and limit) players on the industry’s margins, like payday lenders.
As for the community bankers — they are mostly looking forward to the potential that the Trump administration could offer them an equal playing field against their mega-bank competitors on Wall Street.
“He’s not going to be taking care of the sugar daddies who look down on the hardworking people of America,” Mr. Cloutier said. “But if he don’t deliver on that, he won’t be around four years from now.”