The Senate Committee on Banking Housing and Urban Affairs is facing major changes in its makeup depending on the consequence of the election, especially if Chairman Sherrod Brown, D – Ohio, loses his race.
“The committee is crammed with senior members, so I assume the likes of Sens. Jack Reed and Elizabeth Warren will push for the gavel,” said Brett Bolton, VP, Federal Legislative and Regulatory Policy on the Bond Dealers of America.
Brown is in a tricky reelection race against Republican Bernie Moreno, a automobile dealer supported by former President Trump. As of Aug.12, Brown is ahead a number of points in response to most polls.
“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I’m left with one conclusion: there should be fundamental changes on the FDIC,” said Brown.
If the Republicans gain control of the Senate, the presumption is that Rating Member and Trump loyalist, Tim Scott, R – S.C., would take over the chair.
Brown and Scott united to assist oust Martin Gruenberg as chair of the Federal Deposit Insurance Corporation in May amidst charges of the government-owned group running a toxic workplace.
On the time, Brown said, “After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I’m left with one conclusion: there should be fundamental changes on the FDIC.”
Gruenberg has worked on the FDIC for nearly 20 years and is in his second term as chairman. He has agreed to step down as soon as his successor is approved. President Joe Biden has since nominated Christy Goldsmith Romero who’s a member of the Commodity Futures Trading Commission to take over the embattled organization.
Romero might want to get approval from the Banking Committee and the Senate to take command, which seems likely.
Scott has already gone on the record with doubts about her ability to take care of the contentious Basel III Endgame proposals that were endorsed by the FDIC and several other other government agencies. The proposal would require banks to lift and hold more capital in reserve which could also reduce bank muni holdings and restrict liquidity.
“The subsequent chair must be prepared to steer, because not only are we going to should confront the magnitude of Basel III Endgame, but as I said a number of times already, correcting the culture of the FDIC is so essential,” said Scott in an announcement. “And it makes it difficult to have on the job training, from my perspective.”
The FDIC can be considered one of the agencies leading the implementation of the Financial Data Transparency Act, laws designed so as to add more transparency to the municipal bond market. The laws calls for issuing disclosures in a machine-readable format with less reliance on PDFs.
In early August the FDIC rocked the muni market by announcing a proposal that CUSIP numbers, the number identifying system currently in place may be replaced by Financial Instrument Global Identifiers, a marker based on standards developed by Bloomberg.
Brown and Sen. Elizabeth Warren, D – Mass., have each expressed support for Romero. While Warren was a featured speaker on the Democratic National Convention, Brown didn’t make an appearance suggesting that he was attempting to create a long way between himself and presidential nominee Kamala Harris.
John Fetterman, D – Pa., and Jon Tester, D – Mont., who each serve on Senate Banking were also notably absent.
Tester, who’s been elected within the ruby red state for 3 terms can be in tough political fight against Republican Tim Sheehy, a businessman and former US Navy Seal who’s backed by Trump. Some polls have Tester currently up by five points.
The Banking Committee lost longtime muni champion Sen. Bob Menendez, D – N.J., when he was convicted of taking bribes and resigned from the Senate earlier this week.
If the Trump-Vance ticket emerges victorious in November, J.D. Vance, R – Ohio, would have to get replaced on the committee.
Assuming Trump loses, Vance would likely remain on the committee and proceed the opportunity of strange political bedfellows. Vance has backed laws by Warren that will clawback compensation earned by executives at failed banks.
Vance also co-sponsored a bill by Richard J. Durbin, D – In poor health., that will prevent large bank card issuers from restricting access to electronic payment networks by smaller issuers.
Vance has used his perch on the committee to coach fire on Federal Reserve Chair Jerome Powell and Securities and Exchange Commission Chair Gary Gensler.
The Senate Banking Committee has jurisdiction over the nation’s financial markets, banks, and insurance firms. They oversee mortgage insurance, credit unions, and housing projects.
The lobby tracking site Open Secrets puts all those interests into the finance/insurance/real estate sector, which in response to them, “has historically been the most important donor amongst all sectors and particularly generous to committee members.”
In response to Open Secrets, the Securities and Investment industry contributed $27,968,076 to members of the Banking Committee in 2024 with a median of $1,216,003 contribution per member. Sen. Krysten Sinema, I – Ariz., netted probably the most with $3,498,724 in contributions. Sinema has announced she would retire at the top of her term this yr. Sen. Tim Scott got here in second with $3,115,698.
Handicapping the race will proceed to election night and assuming the Democrats remain in control of the Senate and Brown wins in Ohio, it’s possible nothing will change on the Senate Banking Committee. “If that happens, I assume leadership will remain the identical,” Bolton said.