Magazine article American Banker

'Trump Bump' Will Do Nothing for the Risk-Averse

Magazine article American Banker

'Trump Bump' Will Do Nothing for the Risk-Averse

Article excerpt

Byline: David S. Fisher

Whether the much-discussed "Trump bump" will come to fruition remains to be seen.

Bankers certainly are feeling more positive about economic conditions and the regulatory environment since the November election. Among the visible positive signs are the sudden upward direction in the stock market, a rise in the value of the dollar coupled with a drop in gold prices, and an increase in IPOs and merger activities.

Speak with nearly anyone in the industry and you will hear the optimism in their voice about current prospects for business growth.

But talk is just talk for now. Taking advantage of the new environment is what's really important.

Ray Dalio, head of the Bridgewater Associates hedge fund, published a blog post last month predicting a Trump-led "ideological shift" in investment incentives, tax policy and deregulation that he said could ignite the "animal spirits" in both consumers and businesses. That raw enthusiasm has enormous implications for banking.

Customers will look to put their stores of money back to work. Businesses will want to expand and -- here's a shocker -- borrow money again. The movement of money should not create concerns about deposits flowing outward since funding is still cheap and easy to get. But bankers must ask the question: Is my institution an asset generator? The name of the game will be accumulating assets, preferably loans.

Every bank must determine whether it is sufficiently customer-focused, or too focused on compliance. The industry has been slammed by regulation over the past nine years -- a world dominated by chief risk officers, compliance officers, enterprise risk management departments and internal audits. While those structures need to stay in place, it is now time to refocus on the customer and the shareholder. …

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