Kristin R. MoyerKristin Moyer, David Furlonger, Peter Redshaw and Rick DeLotto here. The US election has almost arrived. A few final thoughts on how the newly elected President and Congress will impact banks and IT:
- We believe that R&D is likely to continue to move “offshore” to countries with existing technology capabilities, interests and funding. The key issue right now for the US and other established markets is funding. The huge deficit that continues to be run and which will undoubtedly increase will make it difficult for the next President and the government to fund viable R&D. For the private sector, the issue is also cash – access to it and cost of capital. Maybe we should look to Moscow for the next set of developments?
- We believe that regardless of who is elected, the next President will be under pressure to act in a protectionist fashion. This could include everything from discouraging the offshoring of work or putting tariffs on foreign imports. In the short-term, this might help US-based IT companies. But in the long-term, protectionism is usually bad for both the IT industry and its customers because it reduces competition and innovation.
- We believe that the post-election future of the US $700 billion bailout is unclear, particularly given there are serious doubts about the efficacy of the existing plan.
- A Democrat victory may bring:
- Increased consumer protection laws, including “predatory lending”
- The possibility of direct federal mortgage lending
- A move towards a single, federal regulator – first for banks, then for all financial services institutions
- A Republican victory may bring:
- Increased bimodal distribution – a few VERY large national banks and a lot of growth at the “boutique,” credit union and community bank level
- Increased use of banks as law enforcement agencies
- Could be potentially surprising and disruptive regarding anti-corruption campaigns
You can follow updates on the election through Twitter. We hope that you have either already submitted your ballot or that you have plans to vote tomorrow. Remember, it’s your right - and, if you don’t vote you can’t complain.
Category: Uncategorized Tags: $700 billion bailout, banking and investment services, IT, twitter, us election
6 responses so far ↓
1 Stessa Cohen November 3, 2008 at 3:05 pm
I think there will be more consumer protection regulations regardless of which party is majority in US Congress or heads up White House. Consumers are pretty fed up.
2 Jeffry Pilcher November 3, 2008 at 4:09 pm
Ditto. Although I wasn’t aware that the outcome of the election was still in question. The article could have been retitled, “What a Democratic Supermajority Means for Banks.”
3 Kristin Moyer November 3, 2008 at 5:18 pm
Yeah, sure looks that way. Yet, it was not that long ago that Gore won the popular vote and not the electoral vote. Oh the hanging chads…
4 Stessa Cohen November 3, 2008 at 5:45 pm
@Jeffry: — i think from a banking perspective, any re-elected or newly elected Congresspeople, regardless of party, will have to be more hyper-alert to what citizens/consumers want. Interesting question: Are consumers going to be more demanding of their elected officials as they are of their retailers? It’s obviously in either party’s interest to get the financial system up and running better. Whoever is in office come Jan 21st is going to want to have (and need!) economic improvements….
5 Andrea Di Maio November 4, 2008 at 3:39 am
Interesting post. But how do you reconcile R&D moving offshore with an increasing protectionist approach? I would argue that if something needs to remain onshore, that is exactly R&D, where the sparkles for the new wave of competitive technologies and business models are fired.
Maybe there is an intesting conflict here about short-term pressure to counter increasing unemployment and a longer-term aspiration not to offshire the most valuable intellectual assets, although they will not grant a rapid ROI.
6 Rick DeLotto November 4, 2008 at 4:44 pm
Jeff–
Concur your analysis, though I strongly suspect that a potential supermajority will disintegrate into factions before it even gets sworn in.