Key Takeaways from the 2025 Elections for Finance Leaders
Written by Zack Condry, Co-Founder of Watermark Strategies
The 2025 elections saw Democratic victories in Virginia and New Jersey, while New York City elected democratic socialist Zohran Mamdani as mayor. Though Republicans maintain unified control of the federal government, these off-year results suggest an electorate increasingly uncomfortable with the status quo. For financial services firms, this uncertainty compresses the window to shape regulatory outcomes, strengthen government-relations strategies, and secure clarity on supervisory expectations.
Democrats won competitive races by running toward the center(ish) in Virginia and New Jersey, while a democratic socialist won New York by running left in a fractured field. Voters are not delivering a clear ideological message; it’s a political one. They are clearly frustrated and rewarding challengers who promise change without much scrutiny of what that change actually entails.
Off-year gubernatorial races have an inconsistent track record as midterm predictors. But this year feels different. The Democratic victories in Virginia and New Jersey were decisive, and they suggest momentum heading into 2026. Voters did not split their ballot or hedge. They sent a clear signal that Republican control in Washington faces skepticism even in a relatively quiet political moment.
And while the results may be indicative of what will occur in the midterms, they are not a crystal ball into the 2028 presidential election. The fickle national electorate could bounce back and forth several times before then.
The bigger takeaway is not about forecasting future elections. It is about recognizing how little time remains before the political calendar makes everything harder. Republicans control Washington now, but by June 2026 Congress will shift into full campaign mode. Whether Democrats flip the House that November or Republicans hold it, legislative progress slows to a crawl once campaigns consume the oxygen. The 2028 presidential race begins almost immediately afterward.
For companies with regulatory priorities, that means roughly six months of real opportunity. Federal agencies are working on frameworks and enforcement priorities now, but after summer 2026, everything might get filtered through midterm messaging, then presidential positioning.
For financial-services firms, that window is even narrower. Treasury, the SEC, the CFTC, and bank regulators are actively refining guidance on digital assets, liquidity management, capital treatment, and M&A review. Once the campaign cycle accelerates, agencies will become reluctant to move aggressively absent a crisis; yet selective enforcement will continue. Firms with unresolved issues, pending applications, or emerging-product strategies will want clarity sooner rather than later.
The irony is that the most consequential period for policy is often the least visible. The big legislative battles get attention, but the regulatory guidance, enforcement priorities, and rulemaking that actually shape how businesses operate get finalized in moments like this, when the political spotlight is elsewhere. But be warned, vague appeals for “regulatory relief” or “modernization” accomplish nothing. Regulators need specificity. If you have a priority in DC, make it tangible and, somehow, bipartisan.
For financial firms, this polarization translates into real tactical complexity. A message that resonates with congressional Republicans may fall flat at Treasury. A state banking supervisor may have a materially different view than the FDIC. The firms that manage this well will tailor their government-relations strategy at the federal, state, and municipal levels and understand how to communicate priorities without triggering ideological backlash.
The 2025 results also show us that there is no single narrative that works across all audiences right now. Voters rewarded moderate pragmatists in Virginia and New Jersey while electing a vocal socialist in New York. And there is still a substantial portion of the electorate that absolutely loves what President Trump is doing. None of these groups should be ignored.
The companies that navigate this well are not necessarily those with the best lobbying operations. They are the ones that understand different constituencies, how to build coalitions that provide political cover, and how to communicate in ways that do not invite immediate backlash. That requires ensuring communications and policy teams are in lockstep, not siloed as corporate fiefdoms.
For FS institutions, that means alignment across GR, regulatory, and corporate-communications teams. Rulemaking and enforcement are increasingly narrative-driven; firms must be able to articulate not only what they want, but why it is aligned with financial stability, innovation, and consumer benefit.
The 2025 elections told us that voters are frustrated, and the electorate is volatile. Perhaps an amuse-bouche for the 2026 midterm elections. But regardless, companies should be prepared for gridlock and turmoil.
The companies that understand this are already moving. Those who wait for more clarity or a better moment will spend the late 2020s explaining to their boards why the opportunity passed them by.
Financial-services firms face a unique risk: those with proactive, well-messaged regulatory agendas will shape the next decade of policy; those who defer engagement will be regulated according to someone else’s narrative.
