In the financial markets, tech and energy stocks have gotten the lion’s share of press recently. As you may know, tech stocks have rallied on surging second-quarter profits, and energy names have tanked on plunging oil prices. But thanks to a major piece of legislation passed last week— led by Trump — one sector of the stock market has staged a major comeback. And as senior analyst Jonathan Rodriguez writes below, there’s a lot more upside ahead for these stocks…
Ahead of the tape,
Louis Basenese
Chief Investment Strategist, Wall Street Daily
The Real Driver of Economic Growth
Banks have gotten a bad rap in the wake of the financial crisis of 2008. Yes, it’s true that some of the country’s largest institutions were guilty of overleveraging themselves and engaging in nefarious trading activities. And the trouble ultimately led to a $250 billion taxpayer-funded bailout of the industry. But the misdeeds of a relative few have weighed on many of America’s banks. As you know, Congress passed the Dodd-Frank Act, which detailed sweeping financial regulations intended to prevent another meltdown, into law in 2010.
Some of these regulations include increased reserve capital requirements, the creation of the Consumer Financial Protection Bureau (a $600 million financial watchdog for consumers) and a mountain of red tape that now stands between lenders and customers. And while many of these cost-heavy regulations target the nation’s largest banks, some of which have been deemed “too big to fail,†they broadly affect banks of all sizes — unfairly so.
In fact, Federal Reserve Chair Janet Yellen confessed in February that community banks — small banks that serve regional customers — were not responsible for the financial crisis. Yet community banks across the country are saddled with the sky-high costs of compliance for crimes they did not commit. We’re talking about millions of dollars they could be lending to their residential and business customers to drive the economy. Well, if the Trump administration has its way… our nation’s most crucial lenders are about to be unshackled.
