2014 Mid-Term Election Results Likely to Ease Burdens for the Banking Industry
Financial Institutions Law Alert 11/13/14 By Kathryn A. Kronquist
With a change in the leadership of the U.S. Senate comes the hope that regulatory relief will be on the horizon. While the U.S. Senate under the current Democratic leadership has remained distant from the rule making activities of the Consumer Financial Protection Bureau (CFPB) and other bank regulators, exercising little oversight of regulatory actions, the industry now anticipates that the new incoming Republican leadership will not sit on the sidelines. Rather, pursuant to recent analysis of the 2014 mid-term election results released by the American Bankers Association (ABA), it is anticipated that the new leadership will take a larger interest in and be more active in their oversight responsibilities, and are likely to consider some regulatory relief bills in the 114th Congress.
The ABA analysis points out that with the change in the controlling party, all Senate leadership and committee chairman will change. Senator Richard Shelby (R-AL) will head the Senate Banking Committee and it is expected that he will be active in his oversight of Dodd Frank Act implementation with a strong focus on the CFPB. In the past, Senator Shelby has voiced his concerns over the onerous regulations that banks face and has previously presented legislation to ease the burdens on the banks by requiring a cost-benefit analysis be done before federal regulators put rules in effect.
On the House side, it is anticipated that there may be a subcommittee leadership change of the House Financial Services Committee which may result in Representative Blaine Leutkemeyer (R-MO) filling this subcommittee assignment. Representative Leutkemeyer is a former community banker and an advocate for regulatory relief bills. Chairman Jeb Hensarling (R-TX) is poised to return to his appointment as chair of the House Financial Services Committee, with the expectation that his committee will take up regulatory relief provisions and continue to push for changes to Dodd-Frank and for the Senate to consider these measures. Another committee in the House having an impact on bankers, due to its powerful tax writing authority is the Ways and Means committee, which is also likely to undergo a leadership change. Representative Paul Ryan (R-WI) is the leading contender for this position and it is likely he will be eager to implement tax reform measures.
With the change of control resulting from the outcome of the elections, it is possible that there may be some Dodd-Frank reform and that some Dodd-Frank issues can pass both bodies with bipartisan support. With the new composition of the Senate, changes to Dodd-Frank contained in prior bills passed by the House but not taken up by the Senate may now actually be considered. While no large, sweeping changes to Dodd-Frank should be expected, the odds are now better that some Dodd-Frank issues can work their way through the process. Some likely developments to watch for include the following:
1. No elimination of the CFPB, but perhaps a structural change from a single director to a five-member board and the possibility of subjecting the CFPB to the congressional appropriations process.
2. Regulatory reform to correct the unintended consequences of Dodd-Frank.
3. More focus on data breach legislation.
4. GSE Reform (a priority issue for Chairman Hensarling).
5. Tax Reform (a priority issue for Representative Paul Ryan).
This mid-term election summary was authored by Kathryn A. Kronquist, Partner, Q&B Washington, D.C. office. For more information, please contact Kathryn A. Kronquist at (202) 372-9519 / [email protected], or your local Quarles & Brady attorney.