The Outlook for 2020

2020 PROMISES TO BE AN EXCITING YEAR in the world of politics, but in the world of policy, very few people in Washington are anticipating much movement or change. In the world of politics, impeachment and the aftermath will dominate the beginning of the year, and it is anyone’s guess whether, after going through what will surely be a bruising fight, Republicans and Democrats will be able to accomplish much legislating between then and election day 2020.

On the financial services front, unless there is a significant change in the political atmosphere, very little is expected to get changed from a legislative perspective. The House, controlled by Democrats, may continue to pass measures but most of these measures have received a cool reception in the Senate thus far this Congress, and that is unlikely to change in the near term. The one area that we could see action would be in the area of some liberalization of banking for cannabis related businesses in states where cannabis is legalized in some form under state law.

On the regulatory front, during 2020 we expect the Consumer Financial Protection Bureau to move the ball significantly forward regarding regulations implementing Section 1071 of Dodd-Frank. As a reminder, Section 1071, when in force, will require commercial financiers to collect certain demographic information about their customers. It is unlikely, however, that final regulations would be issued in 2020, and regardless, the CFPB is going to great measures to telegraph that there will be a long runway to an effective date. Additionally, it remains to be seen which sectors of commercial finance may garner exemptions to these rules. ELFA will remain active in this space and will be sure to keep the membership up-to-date.

On the political front, obviously the presidential race will be the top news story. Going into 2020 the conventional wisdom is that the House is likely to stay under Democratic control and the Senate is more likely than not to stay in Republican control. Significant shifts in the political winds in either direction could push either of those in the other direction. At the presidential level, while much of the election will be defined by the Democratic nominee, in all likelihood, this election, like most others in recent memory, will be more of a referendum on the incumbent than a decision about an alternative.

Regardless of the outcome of the 2020 elections, participants in the equipment leasing and finance industry will continue to face a policy environment that is undergoing a shift toward populism and consumerism. This trend is seen in an increasing number of companies indicating they have significantly broadened their focus beyond the traditional primacy of return to shareholders to include broader societal factors. This is a trend that has continued unabated for years now at varying rates from the violent protests of the G7 in the late 1990’s and early 2000’s, to Sarbanes-Oxley and Dodd-Frank, to the Occupy movement, and the more recent climate demonstrations. Notably, during recent climate protests in Washington, the protesters weren’t protesting at the White House or the Congress, they were protesting at a bank with a large sign that stated, “Stop Funding Mass Extinction.” This is a trend that isn’t going away, and we will continue to deal with it through 2020.