The past 48 hours have been filling up with analysis as to what the next moves by the House Democrats will be as they take over the lower chamber on 3 January 2019. Here is my quick take.
U.S. Representative Maxine Waters, Democrat of California, is expected to become chairman of the U.S. House Committee on Financial Services and using her new position to seek increased regulation of the major banks in the United States. These banks may include JP Morgan Chase, Bank of America, and Wells Fargo.
According to reporting by CNBC, Mrs. Waters would like to shut down Wells Fargo for good. Mrs. Waters holds the financial industry responsible for foreclosures that occurred during and in the wake of the 2008-2009 financial crisis. She wants higher fines for financial institutions that break the law and some banks believe that Mrs. Waters will use the committee’s subpoena powers to harass Wells Fargo and other banks. It is also believed that Mrs. Waters would focus on the Consumer Financial Protection Bureau and housing reform should she become chairman.
According to analysis by MarketWatch, elevated levels of headline risks are expected for banks with Ms. Waters at the helm of the House financial services committee. While her measures won’t pass the Republican-dominated Senate, it is the negative perceptions she may create about the financial industry that has analyst worried.
And these negative perceptions may be generated by investigative powers stemming from Mrs. Waters ability to issue subpoenas once she assumes the chairmanship.
The American Bankers Association acknowledges the flip in agendas resulting from a new chairman at the helm and expects Congress to be very involved in oversight. The ABA wants the banking industry to brace itself for something it has never seen before in terms of the tone of the potential incoming chairman. Given Mrs. Waters tenor, the ABA hopes that remaining moderates on the Committee can move Mrs. Waters toward pragmatism.
The ABA is has identified top issues for the 116th Congress including anti-money laundering, data security, cannabis banking, and reform in government sponsored entities. With one-third of the house financial services committee expected to be new members, the ABA is ready to launch an education campaign toward these members.
Watching Mrs. Waters at the helm of the Committee will be an experience to say the least.