As Donald Trump edges ever closer to winning the Republican nomination for the US presidency, Brian Caplen looks at what a President Trump would mean for the country's banks. And it isn't pretty.

What would a President Donald Trump do to Wall Street and to banks? In the worst-case scenario, the US would become more isolationist and the promised 6% to 7% growth rates would almost certainly fail to come through. This would be bad for everyone, including banks. 

Some bankers might be excited, however, because Mr Trump has talked about his concerns over the Dodd-Frank Act. But while an initiative to reform Dodd-Frank might appear superficially attractive, it would in fact create huge upheaval and uncertainty. 

Mr Trump told The Hill newspaper last year: “Under Dodd-Frank, the regulators are running the banks. The bankers are petrified of the regulators. And the problem is that the banks aren’t loaning money to people who will create jobs.”

The risk for the banks is that as Mr Trump's policies started to fail, the banks could become the scapegoat. Attacking banks is an easy win for politicians of all suits and Mr Trump has shown his skill in turning on critics and heaping abuse on his opponents. Blaming the banks for a failing economy is an approach as old as capitalism and too tempting to turn down. 

The prospect of a Trump presidency is making markets jittery as much because they dislike uncertainty as anything else. Investors struggle to understand what a Trump presidency would consist of in policy terms and what few fragments they can stitch together look negative. 

Mr Trump has been described as the latest in a line of Republican pluto-populists linking up a wealthy class with right-wing populism, as the FT's Martin Wolf has described

As with other advanced economies, the US faces a struggle to stay competitive in a globalised and technologically smart world. American jobs are indeed disappearing overseas and wage differentials and inequality are rising. 

But could Trumponomics – should such a branch of the dismal science ever be discovered to exist – solve these problems? The answer is a resounding ‘no’. Starting a trade war with China and cutting off cheap Mexican labour would merely put the US economy into a nosedive. 

The only way up for the US is to invest in education and skills. However, Mr Trump has vowed to get rid of the department of education and make all education local. 

If, as expected, the next US presidential election is a contest between Mr Trump and Hillary Clinton, the smart thing for the banks to do will be to drop their usual Republican allegiance and support the Democrats. 

Ms Clinton has promised more regulation of banking and markets, but after six or seven long years of regulation, this is just business as usual. At least she would have a credible economic policy and would keep the US open for business. 

Brian Caplen is the editor of The Banker.

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