Uncertainty still chief concern for bankers and investors

• Key insight: Policy uncertainty continues to hamstring decision making amongst financial professionals.
• Supporting data: Amanda Allexon, a partner with Simpson Thacher & Bartlett, said she’s encountered banks whose regulatory examination staff has been reduced by over 30%.
• Forward look: Despite uncertainty around trade and technology, deregulatory efforts like reductions in minimum capital levels are a notable boon to the banking industry. 

NEW YORK — Banking industry experts say that trade policy swings under the Trump administration continue to hinder investment decisions, but are encouraged by the new push to ease the regulatory structure — so long as it’s done thoughtfully.

During a panel discussion at American Banker’s Most Powerful Women in Banking conference Wednesday, industry insiders spoke to a recurring frustration across finance: uncertainty, which hamstrings decision making in the sector. Meghan Shue, chief investment strategist at Wilmington Trust, said her message for the president would be to stop negotiating on trade barriers and give businesses some certainty so they can operate.

“The time for negotiation has passed. We’ve had enough of that,” Shue said. “Let’s set the policy and let businesses actually plan because if you give the rules of the road, small businesses and businesses in the U.S. in general … they’re just so adept at adapting and finding a way. But when the rules are constantly changing, they freeze up, they don’t spend, they don’t make those investments.”

Tasnim Ghiawadwala, global head of commercial banking at Citi, agreed the policy churn is stalling clients while they try to predict the future. 

“Our clients are sort of sitting by and wondering when it’s going to settle down. When can we really invest?” Ghiawadwala said. “Some of the cost burdens that some of the policies might be creating for clients and some of the freezing of decision making — deciding whether to invest now, wait two years, wait five years. I think sometimes policies are created with multiple kinds of goals … but at the end of the day, it always falls on businesses [and] individuals to carry the impact.”

Amanda Allexon, a partner at Simpson Thacher & Bartlett who specializes in bank regulatory issues, said she is fielding as many questions from clients about the administration’s deregulatory efforts as she is about changing trade policies.

“There aren’t that many bank regulatory attorneys out there in the world, but yeah, we’ve seen it tick up,” Allexon said. “The environment has shifted dramatically in this past year, so we’re getting a lot of calls from people … wanting to understand what’s happening.”

Despite the confusion, Shue said she’s noticed optimism in the investor space about freeing up of capital, saying there’s “more and more consensus around reducing some of the capital requirement ratio,” referring to the supplementary leverage ratio and other capital proposals in train at the agencies. 

“Reducing some of the capital…