JD Vance did more than shakeup the presidential election – he shook up Wall Street, and maybe Silicon Valley, too.
With the polls showing a Trump presidency gaining increasing odds, sources tell On The Money that just hours after the US senator from Ohio’s selection as Trump’s running mate, analysts began hosting conference calls with clients – big investors, major companies, etc. – on what his possible election as a vice president might have on policy.
For starters, Vance’s rep as a firebrand populist combined with his intellectual bandwidth and knowledge of economic policy and finance are leading many top Wall Street officials to believe he’s going to have a say in the Trump economic agenda.
One source — a lawyer at a major Washington DC based firm — said it won’t be just trade wars. He will look to rein in the power of Big Tech. You can see a Trump-Vance FCC rethinking Section 230 of the Communications Decency Act, the legal shield that allows all of social media to operate without fear of liability for its published content.
Losing that shield could be catastrophic for companies like Facebook and even Twitter. Vance could lead a push to use FCC rulemaking to weaken some of the shield, something that was debated during the final years of Trump’s first term when Twitter was throttling and in some cases banning conservative voices.
Of course that was before Elon owned Twitter, and then jumped on the Trump train, so it’s unclear how much a new Trump-Vance GOP wants to tussle with a platform that is now open to MAGA voices. But it’s still a possibility if they make it to the White House.
Vance also has had strangely nice things to say about Lina Khan, Biden’s lefty chief of the Federal Trade Commission chief and a bane of conservative economic commentariat. She made her bones as an Ivy League academic who opined on the evils of online retailer Amazon exerting monopoly control. She thinks the same about Google and if she had her druthers, would break them both up on antitrust grounds (she has filed suits against both companies).
I’m not sure Vance wants to go that far, but it’s something else to factor into the equation if he is elected.
Vance has dissed corporations getting tax breaks, even if Trump is now pushing a new corporate tax cut. That’s why another legal source who worked in the Trump White House tells me that Vance might go for some low-hanging populist fruit that targets the private equity industry.
Vance, he says, may do away with its cherished tax loophole, the so-called carried interest deduction that allows PE firm managers to a lower tax rate on money made on their portfolio companies than the rate for regular income.
It’s highly controversial even if the PE lobby has successfully fought back attempts to end it even during the Trump years, arguing, and not unconvincingly, that it would be net-net bad for the economy. Without the perk, PE firms wouldn’t invest and try to repair companies they take private, which sometimes take years to fix.
Vance hasn’t spoken much about the carried-interest controversy and maybe for good reason: During his VC days, he probably made a ton of dough using the loophole, but that’s when he was a Reaganite Republican, not a MAGA Republican.
“It’s easy for him to push to get rid of it and score some points with the populists both on the left and right because they think carried interest is unfair,” my lawyer source said.
Others aren’t so sure. One PE government affairs official says he’s not worried. “JD has bigger fish to fry,” he says. And one big fish is energy policy. Vance wants more drilling, my sources say, and he will definitely push for far less green energy gambits coming from the Biden administration. EV tax credits could be gone as well if he had druthers.
And he hates corporate wokeness. During a Senate banking committee hearing in December, he lambasted the heads of the big banks including JP Morgan’s Jamie Dimon and Brian Moynihan of Bank of America for delving into political debates, touting progressive causes on the environment, guns, abortion including their support of Environmental Social Governance investing, which he said led to less drilling and high gas prices for average Americans.
“Stay out of public policy, unless it affects your core business interests, because if you don’t, it’s going to be a lot harder for us to see you guys as neutral arbiters and neutral actors in the American financial system. It’s going to be much easier for us to see you as political actors,” Vance told the Wall Street bosses.
Before the banking lobby starts to attack him, consider the following: the Vance effect won’t be all bad for Wall Street. Net-net a Trump-Vance administration will be much better for Wall Street M&A, which is a landmine of regulatory pratfalls with the Biden people in charge where almost no deals can get done.
If elected, Trump II with Vance at his side is going to be interesting, so get your popcorn.
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