Now that the 2016 presidential election is over and 2017 will usher in an administrative team comprised of seasoned business leaders, a different and new direction may likely be felt in the secured lending industry as we all face the questions “What’s next?” and “What does that mean for business?”
The verdict is still out as the President-Elect has not yet taken office, but the campaign promises were clear:
- Lower the corporate tax from 35% to 15%
- Repatriate large sums of cash parked overseas back to the U.S.
- Penalize companies that export jobs and then import products for sale back in the U.S.
- Renegotiate trade deals to be more favorable to U.S. workers
- Create more energy independence in a resource rich country
- Create more opportunities for able and willing workers to participate in the work force again
On the face of it, these promises could impact the financial industry favorably since the supply of money would likely increase as would the demand to expand and create new companies and industries in the U.S. through equity and debt financing. As intermediaries in the financial markets, bankers and secured lenders convert money from those who have an excess and repackage the money to loan to those who need it. Therefore, any increase on both ends of the money cycle is likely to have a positive influence for the lending industries.
Much will be debated, about the intended and unintended consequences of these promises as well as how other non-financial decisions regarding the environment, international relations, etc. impact and are impacted by these broad directives. For example: What will be the repercussions of trade negotiations? Will lower corporate taxes raise taxes in other areas or will economic growth make up the difference? Will geopolitical concerns and reaction prevent U.S. energy development from moving aggressively forward?
This much is certain, opportunities will change and mitigating risk will be key in our aggressive lending environment.