Election 2010 and Financial Services Politics

J.W. Verret —  2 November 2010

I thought it would be interesting to blog some of the rumors currently circulating about what the election will mean for the makeup of the House Financial Services Committee and the Senate Banking Committee.  The makeup of the Senate Banking Committee is, I would argue, the single most important driver shaping financial services legislation.  The membership of the House Financial Services Committee is also important, though not as important as the Senate frankly.  So I thought handicapping Committee membership would be a great way to spend my time while I wait for the results to come in.

For the House, the rumor currently going around that there is a significant chance that Representative Spencer Bachus, currently the Ranking member on Financial Services, will not be getting the Chairmanship.  Instead, it sounds like there is a significant chance that Rep. Ed Royce from California will become Chairman.  Of course, with the retirement of Chris Dodd, Senator Tim Johnson will be taking over the Chairmanship (or Ranking Member) position for the Democrats at Senate Banking.  The conventional wisdom is that Senator Johnson is less liberal than Senator Dodd.

Mike Lee is predicted to soundly take over Bob Bennett’s seat in Utah, and I think it is very likely that he will be given a seat on the Senate Banking Committee. Utah has a thriving Industrial Loan Company business which tends to encourage the Utah delegation to seek Banking Committee membership.  I think similarly the winner of the Delaware contest, either Chris Coons or Christine O’Donnell, will also likely take a Banking Committee seat out of Delaware’s interest in reigning in federal pre-emption of Delaware’s corporate law.

With the retirement of more senior members Bob Bennett and Jim Bunning, we will see Senator Mike Crapo move up to the second-most senior Republican position on Senate Banking.  Senator Shelby has been a long serving Senate member, so in the event he retires or takes another Committee Chairmanship in the future we might see Senator Crapo taking over the Republican leadership on Senate Banking.  If Senator Schumer becomes the Majority Leader, then his seat at Banking will need to be filled, and I would suspect New York’s interest in financial services may lead Senator Gillibrand to take over that seat on the Committee.

The one Senate Banking Committee member whose seat is currently at risk is Senator Bennett (D) of Colorado.  It is also likely that the Republicans will be able to add seats to the Banking Committee even if they do not win a majority in the Senate, in which case the presence of more conservative Democrats like Senator Warner of Virginia on Banking could give the Republicans significant influence over the shape of financial services legislation in the 112th Congress even if they fail to win the Senate.