Historically conservative, newly polarized: Financial pros starkly divided over 2020 election

Registered Republicans and Democrats in the financial services industry overwhelmingly contend a sweep of the November 3 election is the best outcome for their industries and the nation.

And for American financial services professionals with a political identity, there’s little room for compromise. This is according to a survey by Arizent, the publisher of PaymentsSource and other financial services publications such as American Banker, Financial Planning, Credit Union Journal, and National Mortgage News.

A total of 1,201 business leaders and professionals in the U.S. answered the survey, conducted online between Sept. 17 and Sept. 22. The industries represented include banks, payment firms, insurance agents and carriers, municipal finance agencies and advisors, accounting firms, tax preparers, fintech and IT professionals, wealth management and financial advisory firms.

The respondents decidedly lean Republican, or at least “non Democratic.” 40% of the respondents are registered Republicans, 26% are independent, 24% are Democrats, 2% said “other” and 8% preferred not to say. That’s more conservative than the nation at large. In 2020, about 40% of registered voters in the U.S. are Democrats, down from 42% in 2004; 29% of voters in 2020 are Republicans, down from 33% in 2004; and 29% are independent in 2020, up from 23% in 2004, according to third-party data from The Washington Post.

The Arizent survey found 81% of registered Democrats believe a Joe Biden presidential victory and full Democratic Congressional control are best for their industry, while 84% of Republicans believe finance would be best served if the White House and Congress are in full GOP control. Only 10% of both Democrats and Republicans found full control by the other party would be the best option, while narrow percentages preferred split government.

But what's best for the financial services industry may not be what's best for the country, according to a narrow cross section that wants to see the country led by Democrats even if finance would benefit more from the GOP.

Eighty-five percent of Democrats believe full Democratic control is best for the country, while 78% of Republicans feel full GOP control is best for the country. So there are 4% of Democratic finance professionals who think their industry would be better with Republicans in charge, and 6% of Republicans who think the financial services industry would be better off with Dems in charge, but not the country at large.

Among independents, the results are more predictably even, with 52% saying Biden would be best for financial services and 48% saying Trump would be best—and 40% of independents saying full Democratic control would be better and 40% of Republicans saying full GOP control would be better for finance. For the country as a whole, 54% of independents prefer Biden and 47% prefer Trump, while 42% want full Democratic control and 38% think full Republican control is best for the nation. And despite calling themselves independent, these voters also have little appetite for split government.

The size of the respondent's company is also an important distinction. Sixty-one percent of the respondents work for a firm with fewer than 100 employees, 17% at a medium-sized firm with 100-999 employees and 23% at companies with more than 1,000 employees. The small firm respondents favor Trump 61% to 39%, the mid-sized companies favor Trump 55% to 45% and it's a 50-50 tie for the large companies.

The financial services polling indicates animus toward political opponents and passion for political allies, a trend that has accelerated in the country for the past four years. Nationally, Republicans giving Democrats a “cold” rating jumped from 69% to 81% between 2016 and 2019, according to Pew Research; while Democrats giving Republicans a “cold” rating increased from 61% to 79%.

That’s how the professionals want the election to turn out. How they think it will turn out is a different story. While Democrats and Republicans believe their side is best suited to guide the country, most believe the election will result in some form of divided government, with the White House and Congress of different parties, or the Congress split.

Democrats in the financial services industry are more confident in a Democratic sweep than Republicans are in a GOP rout, but both party members' predictions of a sweep fall below half. Democrats are resigned to the GOP maintaining some level of power. That would create potential hurdles for financial services regulation and more liberal-leaning initiatives such as postal banking and digital dollars.

The Democrats will likely need more political power to make these goals a reality. With split government, central bank digital currencies and postal banking would likely have more bank involvement and fewer ties to the federal government.
The Republicans are far less confident in a clean sweep, perhaps due to the larger number of Republicans that need to defend their seats in the Senate — 23 GOP seats are up for reelection in November, while 12 Democrats have to defend their seats. The Democrats need to win three or four seats, depending on if Biden wins, to take control of both houses of Congress. Political analysis publication 538.com gives Biden a 77% chance of winning and the Democrats a 60% chance of taking control of the Senate.

If Trump wins and the Democrats control both houses of Congress, battles over judicial nominees could become even more contentious than they are today.

For financial services, the landscape would look similar to the current environment, though Trump would have less Congressional support. A clean GOP sweep would lead to further deregulation for banks and the likely dilution or elimination of consumer-focused agencies like the Consumer Financial Protection Bureau.
Independents see a broader range of outcomes, but tend to lean toward the Democrats in their predictions. More than two thirds of independents predict some form of divided government and continued stalemate.

A divided government would result in more incremental change in either a progressive or conservative direction.
Professionals predicting a Trump/Republican win and a Biden/Democratic win are both confident those outcomes will be largely positive among a variety of issues, ranging from pandemic recovery to the stock market.

Regarding non-financial services issues, 76% of those predicting a Democratic win said it would renew faith in the integrity of the election; while only 58% of those predicting a Republican win believe that. Eighty-nine percent of those predicting a Republican victory said it would lead to a stock market rally, while only 60% of those predicting a Biden/Democratic victory expect a rally — likely a function of the belief the Democrats will push for more regulations on Wall Street and the banking industry.
There is also a notable partisan divide on the most important issues for the next administration and Congress.

Arizent asked respondents to pick the top five issues among a list of 13 issues. Republicans favor the national debt and tax reform, while Democrats say climate change, expanding access to health care and economic inequality are vitally important. Democrats feel racial equality is far more important than Republicans and most independents.

The answers tie to issues such as financial inclusion, security technology and international supply chain finance. While data breaches, phishing and hacking are on the rise and threats are proliferating as more commerce moves online, less than half of all political affiliations feel cybersecurity is among the five largest policy priorities.

Very few respondents felt nonbank regulation is among their top five issues. This could impact companies in blockchain technology and fintech that often operate with a lack of consistent regulations in different jurisdictions.