As President Donald Trump’s poll numbers continue to sink, Wall Street is starting to envision Washington under Joe Biden -- a scenario that many executives say they welcome. But to some pessimists, the upbeat view underestimates the rising influence of progressive Democrats who are demanding a clampdown on banks, hedge funds and private-equity firms.

Those with the rosier outlook point to Biden’s mostly pro-business inner circle, his significant campaign contributions from the financial industry and his longtime support of credit card companies located in his home state of Delaware. Plus, a Biden victory would likely be driven by U.S. voters seeking change because they believe the country is a mess. Wall Street thinks it has a strong argument to make that reining in lenders would be a fatal mistake when unemployment is sky-high and the economy remains ravaged by the coronavirus pandemic.

The enthusiasm, however, is tempered by fears over how much sway Biden will give progressives and their firebrand leaders, including Senators Elizabeth Warren and Bernie Sanders. That’s especially true when it comes to picking appointees to run the powerful agencies that police banks and securities firms, jobs that the activists are mobilizing to fill with industry critics. At a minimum, progressives want to ensure that the days are long over when Democrats appointed officials like Robert Rubin, Timothy Geithner and Lawrence Summers, who is a key Biden adviser.

The stakes for Wall Street couldn’t be higher. Centrist regulators would be less likely to overturn rule rollbacks approved under Trump that have saved financial firms tens of billions of dollars. Progressive agency heads, on the other hand, could pursue what the C-suite calls the “shame and investigation agenda.” Policies like taxes on trading, curbs on executive pay and even breaking up behemoth banks would be back on the table.

Serious Threat
That’s a threat that the industry should take seriously, especially if wealth inequality and Covid-fueled job losses “force a new Democratic tone,” said Karen Shaw Petrou, a managing partner at Washington research firm Federal Financial Analytics. “While Biden as president would surely be less ornery than Warren, it’s more than premature to say he won’t be considerably more progressive than many on the Street expect.”

The looming battle over key positions at agencies such as the Treasury Department, Federal Reserve and Securities and Exchange Commission was described in interviews with more than a dozen people including progressives, financial executives, banking lobbyists and ex-regulators. Most requested anonymity so they could discuss specific names and strategies without endangering access to the Biden campaign.

“All these jobs matter,” said Jeff Hauser, who runs the Revolving Door Project, a Washington-based group that has led campaigns to keep corporate executives out of government.

The debate threatens to put Biden in a bind as he seeks to balance the competing interests of Wall Street donors and the activists he’s counting on to help generate enthusiasm among Democratic voters. Thus far, the former vice president has mainly stayed mum on potential nominees.

The Biden campaign, according to people who have been in touch with it, has also been vague in private. Some attribute that to disorganization, while others say his aides want to avoid a divisive topic, especially at a time when the focus is on beating Trump in November.

The Biden campaign declined to comment.

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