The View from November 3rd
The results of the 2010 mid-term elections are now in, meaning it’s time to begin analyzing what a new Republican House majority and a more narrowly divided Democratic Senate majority will represent for financial reform efforts in the 112th Congress.
Speaking to reporters this morning, House Minority Leader and likely the next Speaker of the House, John Boehner (R-OH), appeared to tone down previous calls by him and fellow GOP colleagues for a repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act, instead expressing his caucus’s intention to begin closely scrutinizing the implementation of the sweeping financial reform legislation through aggressive oversight. The GOP is expected to focus its sights on the following—the newly-created Consumer Financial Protection Bureau (CFPB); FDIC resolution authority that allows the agency to wind down failing financial institutions; and new rules governing financial derivatives. Republican gains in both the House and Senate will almost assuredly nix President Obama’s ability to usher through the Senate a potential nomination of Elizabeth Warren as a permanent director of the CFPB.
Despite the GOP’s renewed focus on overseeing and potentially repealing certain provisions of Dodd-Frank, a Democratic-controlled White House and Senate will still significantly hamper Republicans’ ability to pass any broad or sweeping changes. The most viable tool at Republicans’ disposal will be the power of the purse, as attempts could be made to prevent Dodd-Frank’s implementation through the withholding of federal appropriations to certain agencies. However, from a political standpoint, it remains to be seen whether the new House majority will risk being viewed by the electorate as proponents of Wall Street deregulation when looking ahead to 2012.
In addition to the oversight of Dodd-Frank, the looming congressional battle and the top legislative priority for the House Financial Services and Senate Banking Committees will be the reform of the U.S. housing finance system, particularly the Government Sponsored Enterprises (GSE), Fannie Mae and Freddie Mac.
In terms of key committee leadership posts, the top contender for the chairmanship of the House Financial Services Committee appears to be current ranking member Spencer Bachus (R-AL), who has served as the committee’s ranking Republican since beating out Howard Baker (R-LA) in 2006. Bachus possesses a conservative voting record and has stated his intention to make GSE reform and the reexamination of the Dodd-Frank bill—particularly the provisions related to the CFPB and derivatives regulation—his top priorities. The other potential contenders for the chairmanship include Ed Royce (R-CA) and Scott Garrett (R-NJ), although Garrett told reporters today that he expects Bachus to be chairman. Top Democrat Barney Frank (D-MA) is also expected to reassume the role of ranking member, a position he last held in 2006.
Aside from the transition in leadership, the committee will also lose at least 16 of its members due to reelection losses or retirements (13 Democrats and 3 Republicans). Of those 16, the most prominent committee member that will not be returning in January is the chairman of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, Paul Kanjorski (D-PA), who lost his bid for a 14th term on Tuesday. Currently, Gary Ackerman (D-NY) is next in line to assume the ranking member position on the subcommittee, which will play an outsized role in the pending GSE debate. Garrett—a vocal critic of the GSEs in their current form—is next in line to chair the subcommittee.
Joining Kanjorski, the following Democratic committee members also lost their races for reelection: Ron Klein (FL), Charlie Wilson (OH), Bill Foster (IL), Travis Childers (MS), Walt Minnick (ID), John Adler (NJ), Mary Jo Kilroy (OH), Steve Driehaus (OH), Suzanne Kosmas (FL) and Alan Grayson (FL).
Over in the Senate, three members of the Senate Banking Committee will be retiring at the end of 2010, including committee Chairman Christopher Dodd (D-CT), subcommittee chairman Evan Bayh (D-IN) and subcommittee ranking member Jim Bunning (R-KY). In addition, Robert Bennett (R-UT) lost his Republican primary for reelection in May. With Dodd’s pending departure, Tim Johnson (D-SD) appears slated to assume the chairmanship, with Richard Shelby (R-AL) retaining the ranking member post. Although Johnson’s chairmanship in the Senate appears secure, senior committee member Jack Reed (D-RI) has also been named as a potential contender. The narrowed Democratic majority of one or two seats on the committee will heighten the need for bipartisanship and ultimately grant moderate members such as Mark Warner (D-VA) and Bob Corker (R-TN) with greater influence moving forward.
Stay tuned in the days ahead as Financial Reform Watch continues to make sense of Tuesday’s historic election results.
