Independent Banker - October 2020 - 40

" IF BIDEN WINS
AND THE
SENATE TURNS
DEMOCRATIC,
THEN WE COULD
EXPECT A MOVE
TO INCREASE
THE CORPORATE
TAX RATE BACK
UP ABOVE 21%. "
-Karen Thomas, ICBA
relations and strategy, emphasizes that
the high-level issues of importance
to community bankers do not change
dramatically from election to election,
given that " what we're pressing for is
largely regulatory relief. "
While the exact makeup of the
legislative and executive branches
remains very much in play, one
thing that's almost certain is that the
Democratic Party will retain control
of the House next year. This means
that, while the Democrats could wind
up with control of both the White
House and Congress,
the best-case scenario
for Republicans is
probably the status
quo: two more years
of a divided Congress
and a Republican
president.
Here, ICBA experts
forecast how the
four most likely
outcomes of the
November election
would affect the most
pressing issues for
community bankers.
+ SCENARIO 1:
DEMOCRATS WIN
THE WHITE HOUSE
AND CONGRESS
The scenario that
would bring most
dramatic change
is the clean sweep: former Vice
President Joe Biden beats President
Donald Trump on Nov. 3 and the
Senate flips to the Democrats.
Merski notes that " in general,
Republican administrations have been
more focused on reducing regulatory
burden. " So, with a Democratic
administration and a unified
Congress, community banks could
expect to face stiffer regulations and
heavier reporting requirements.
If Democrats assume control, one
issue almost certain to be revisited is
the corporate tax rate. The Tax Cuts
and Jobs Act of 2017 lowered the
corporate income tax to a flat 21%
for tax years beginning after Dec. 31,
2017. Prior to that, the corporate
rate was 35% at the highest income
bracket and as high as 39% for some.
" If Biden wins and the Senate turns
Democratic, then we could expect a
move to increase the corporate tax
rate back up above 21%, " Thomas
says. A higher corporate tax rate
would be a headache for community
bankers because their small business
customers tend to suffer under more
burdensome tax regimes.
The corporate tax rate is one
concrete change, but arguably more
important still is a new " tone from
the top, " says Ron Haynie, ICBA's
senior vice president of mortgage
finance policy. Just as " we saw a very
distinct change when the current
administration took power, " he says,
a Democrat in the White House would
usher in new priorities.
" While the president may not have
direct control over a banking agency
or a regulator, [they set] the tone, "
Haynie says. " It becomes very clear
the direction that that administration
wants to go. So, if it's one of
tightening regulation-rather than
loosening regulation-that will be felt
down through the ranks. "
New presidents also appoint
new agency heads, and community
banks are keenly interested in who
would run the Consumer Financial
Protection Bureau (CFPB) in a Biden
presidency. Haynie says that from
2012 to 2017, when Richard Cordray
led the CFPB, banks were " absolutely
terrified of making a mistake. That
put a damper on mortgage volumes
and lending. Bankers didn't want to
take any chances. "
While the CFPB is important to
40 Q ICBA Independent Banker Q October 2020
Independent Banker - October 2020

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