NEW YORK (TheStreet) -- Wall Street is praying for a Republican victory, but big banks may not necessarily have an easier time with Washington if Romney wins.
A panel of economists and analysts speaking at the annual conference of trade group Securities Industry and Financial Markets Association (SIFMA) Tuesday said that while Romney is pro-capital, he might remain tough on big banks.
"There is no relief for big banks irrespective who wins. There may be some relief for community banks," said Brian Gardner, senior vice-president, Washington Research at KBW.
His comments were a nod to Romney's first debate, where he criticized the Obama administration for identifying banks that were too big to fail and essentially giving them "a blank check." Romney has said he will get rid of the notion of "Too Big To Fail," which he said was "killing regional and small banks."Systemically important financial institutions, or SIFIs, as defined by U.S. bank regulators are commonly considered "Too Big to Fail." Some of the largest SIFIs include the "Big Four" U.S. banks JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS) and Wells Fargo (WFC) Gardner believes that a lot depends on who Romney appoints to regulatory agencies. The Governor has said he will not re-appoint Ben Bernanke to the Federal Reserve. He may appoint someone more hawkish, which might not be good for the stock market. More importantly, Gardner says he will watch for who is appointed to head the Federal Deposit Insurance Corporation (FDIC). "One of the candidates to head the FDIC is Tom Hoenig, who is a fan of breaking up the big banks. So you have to be careful what you wish for," he said. Bank stocks historically have risen the day after a Republican wins the elections. But Credit Suisse analyst Howard Chen says that it does not really matter whether it is Republicans or Democrats. "Will investment bank stocks rip if Romney wins? Absolutely. Is it a rational reaction from a two-year perspective? Not really," said Chen. The analyst believes that it is unlikely that there will be any significant roll-back in financial regulation. Ideas such as ending too big to fail had gained momentum. "Whoever wins this election, we will see repercussions for Too big To Fail banks," said Chen. Bank stocks will also continue to take their cues from the macroeconomic environment and progress in rule writing.
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