Election Analysis: AFSA Examines the Midterm Results

  • American Financial Services Association
  • November 9, 2018
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The midterm elections are history and we now know that the House of Representatives will shift control to the Democrats, while the Senate will have a strengthened Republican majority.Of particular interest to AFSA members, Tuesday’s winners include the former chief of staff of the Presidential Task Force on the Auto Industry, a mortgage company founder, and an auto dealership owner, all of whom will be in the House freshman class in January. Richard Cordray, the former Director of the Bureau of Consumer Financial Protection (BCFP), lost his bid to become Ohio’s next governor.116th Congress-House

Now that control of the House will shift to the Democrats, this means that the Financial Services Committee Chair will now be Maxine Waters (D-CA).  AFSA already has a strong relationship with now-Ranking Member Waters; working with her whenever possible. Although she tends to be tough on the financial industry, she is someone that we have found common ground with in the past and will continue to work with her moving forward. Waters seems to be driven by her constituents (she represents part of Los Angeles) and has been supportive of several measures helpful to the auto industry.

Waters has indicated an interest in curtailing many of the changes that acting BCFP Chairman Mick Mulvaney has enacted. These include changing the name back to the Consumer Financial Protection Bureau, limiting the number of political positions at the bureau, increasing the overall staff, restoring supervisory and enforcement powers for the fair lending office, mandating the consumer complaint database be publicly accessible, and holding predatory lenders accountable.

In the lame duck session, bureau nominee Kathy Kraninger is likely to be confirmed to succeed Mulvaney. In the next Congress, Waters will likely request Kraninger to testify multiple times before the Committee; Kraninger will receive tough questions from the new Democratic majority about Mulvaney’s changes to the Bureau and her (likely) continuing to carry out those changes.

Because current chairman Jeb Hensarling (R-TX) is retiring, the committee’s ranking member slot will now be open. Several Republicans have indicated interest in the position, including Blaine Luetkemeyer (R-MO), Patrick McHenry (R-NC), Frank Lucas (R-OK), Sean Duffy (R-WI), and Bill Huizenga (R-MI).  AFSA has strong relationships with all potential ranking member candidates.

For overall House leadership, former Speaker and current House Minority Leader Nancy Pelosi (D-CA) is poised to take over as Speaker, but may be challenged in her quest to retake the gavel. The current top three people in House Democratic leadership are all in their late seventies, and younger members (several of whom pledged not to support her) may look for a changing of the guard.

116th Congress-Senate

The Senate will not have a change in partisan control, and in fact the Republicans will strengthen their power in the chamber from their current 51 seats to as many as 54 (races in Florida and Arizona are currently too close to call, and Mississippi will conduct a runoff on November 27).

The Senate Banking Committee saw three of its members go down, as Heidi Heitkamp (D-ND) and Joe Donnelly (D-IN) lost on the Democratic side, while Dean Heller (R-NV) was the sole Republican to lose his reelection race.  The Committee will continue to be chaired by Mike Crapo (R-ID) unless Crapo opts to take control of the Finance Committee.  Should he switch, Pat Toomey (R-PA) is expected to assume the helm at Banking.

Additional banking reforms may be difficult to achieve in the 116th Congress; in addition to Heitkamp and Donnelly, other moderates who supported the banking reforms this year also lost their seats (Claire McCaskill (D-MO) lost and Bill Nelson (D-FL) is behind in his race.  Fewer moderate Democrats in the Senate, combined with a Republican majority still significantly short of a filibuster-proof 60 seats, will make passing legislation difficult.

The House and Senate controlled by different parties will also lead to less unity on legislative priorities as well.

In Senate leadership, Mitch McConnell (R-KY) will remain Majority Leader. Current Majority Whip John Cornyn (R-TX) has hit a term limit on his position and is likely to be succeeded by current Commerce Committee Chairman John Thune (R-SD). Senator Chuck Schumer (D-NY) is expected to remain Minority Leader and Dick Durbin (D-IL) will likely remain as Minority Whip.

To reiterate AFSA’s message from the annual meeting, no matter who wins elections and no matter what regulatory agencies consider rules affecting the industry, AFSA will continue to advocate for our valued members for access to safe, affordable credit.

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