Financial Services Under the Biden Administration: Part II

Read Moeller and McGuire's discussion about global commerce, emerging opportunities for foreign investment, anti-money laundering enforcement and more in Part I. 

Urgency on Clean Energy

President Biden’s ambitious climate agenda is one of the administration’s most pressing priorities, and with former top government officials Gina McCarthy and John Kerry now in place as White House climate advisors, a number of initiatives to grow U.S. clean energy production and modernize the nation’s energy infrastructure are underway.

But incremental progress toward greater consumer access to clean energy technology is as important as sweeping, long-term plans from the administration, McGuire says, and it will require action from both lawmakers and consumers.

“A very interesting question is with the advent of electric cars, could you see in an infrastructure bill the proliferation of charging stations up and down our highways and in our neighborhoods?” he said. “You could see a lot of rapid adoption of clean energy of various sorts, and part of that is also about consumer behavior … it’s got to be cost-efficient, and people have to want to move to some of these new directions.”

COVID-19, the DPA and the DFC

Consistent with the Trump administration’s actions in the early months of the pandemic, President Biden has invoked the Defense Production Act (DPA), whose domestic financing authority is delegated through the U.S. Development Finance Corp., to quickly ramp up U.S. COVID-19 vaccine production and provide enough inoculations for all Americans before the end of summer 2021.

But as the vaccine rollout progresses and the U.S. looks to a post-pandemic economy, will the DFC continue its trend of investing in domestic production in addition to making foreign investments? McGuire says it’s likely, particularly in light of President Biden’s campaign theme of supporting “ordinary, hard-working Americans” across the country.

“I do think focusing on leveraging U.S. talent and doing more production here for investing overseas or for selling products and services into other markets … will continue,” he said. “DFC will have a bit more of that dual hat than perhaps it has in the past.”

McGuire also says DFC activity out could be another key indicator of the Biden administration’s priorities as they relate to the financial services industry and energy investments.

“Under President Obama, [DFC] shifted about half of its new investments to clean energy in Africa,” he said. “This is what the U.S. does better than anybody, I would argue – utilizing our technology, our extraordinary companies, and taking it into other countries, where it can do even more and better.”

The Trump administration significantly expanded the DFC’s purview and equipped the organization with a wider set of tools, resulting in billions in U.S. funding that is ready to be implemented.

There’s a lot more money that can go out now, so that’s one to watch: What are the key priorities in getting those billions of dollars out the door, and what are they going to focus on?” he said.

McGuire also suggests the Biden administration’s approach to the DFC’s strategy also will be influenced by U.S.-China competition, with the U.S. striving to counter China’s “checkbook diplomacy” in regions like central Asia Africa and Latin America.

“My guess is DFC will be more assertive in making sure that the American model and the American dollars are coming in to support those countries,” he said.