NEW YORK (
) -- 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
Bank of America
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
. 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.
"This is still a fragile sector to cover from an equity point of view," said Chen. "Anything that dents confidence in economic growth will hurt the industry."
"We had the weakest M&A activity last quarter and that is with a low free cash flow yield and strong balance sheets. That is because of low CEO confidence out there," he added.
As for any progress on resolution of the mortgage finance giants, which is seen as key to bringing back private capital into the mortgage market,
, Gardner believes there is greater chance of that happening under Obama.
"A second term president can take the risk of diving into mortgage finance," said Gardner. Romney on the other hand will not want to hurt his chances of re-election by tackling a politically-sensitive issue such as the role of government in housing.
Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.