Goldman CEO Embraces Trump's Populist Policies

David Solomon, CEO of Goldman Sachs, has expressed optimism about the economic boost expected from President Donald Trumps populist measures ahead of the US midterm elections.

At a financial services conference hosted by UBS in Miami, Solomon suggested that these measures could stimulate both the overall economy and capital markets, potentially benefiting the mergers and acquisitions (M&A) sector. This marks a shift in Wall Street's traditional stance, where major banks typically advocate for minimal government intervention.

Trump has introduced several initiatives since January to address rising living costs, which he previously dismissed as a "hoax." These measures include launching a platform for consumers to purchase medications at reduced prices and mandating that banks cap credit card interest rates at 10% for a year. In the housing market, the Trump administration plans to have government-backed banks Fannie Mae and Freddie Mac purchase $200 billion in mortgage-backed securities (MBS) to lower costs for homebuyers. Additionally, there's a proposal to ban large institutional investors from purchasing single-family homes, although this has faced resistance in Congress.

Economists have expressed concerns about these initiatives. Large-scale MBS purchases could push Fannie Mae and Freddie Mac to hit regulatory limits set post-2008 financial crisis. Jack Janasiewicz from Natixis Investment Managers Solutions noted that using cash reserves for MBS buys could introduce interest rate risks. Major US banks, including Wells Fargo and Citigroup, have opposed Trump's proposed interest rate cap, arguing it could restrict credit availability and hurt economic growth.

However, for Goldman Sachs, which recently offloaded its credit card partnership with Apple to J.P. Morgan, the direct impact appears limited. Despite tensions, Goldman Sachs aims to maintain a constructive relationship with the Trump administration. This follows criticism from Trump after Goldman's Chief Economist Jan Hatzius released a study critical of Trump's trade policies. Meanwhile, Mizuho Americas anticipates tighter credit underwriting standards if the interest rate cap leads to reduced risk compensation, potentially impacting small businesses and low-income individuals who may turn to less regulated credit sources. Economic projections from the Atlanta Fed suggest stronger-than-expected growth, contributing to an investment banking upswing. Solomon remains cautiously optimistic, acknowledging geopolitical tensions and inflation risks but forecasting a positive year for capital markets and M&A in 2026.