The House shakeup set in motion by the primary loss of Majority Leader Eric Cantor could, depending on how new leadership roles are assigned, lead to stricter Securities and Exchange Commission oversight of financial advisors.
Changes in Republican leadership could elevate Rep. Jeb Hensarling, chairman of the Financial Services Committee, to a higher post and result in his chairmanship being filled by Rep. Randy Neugebauer of Texas or Rep. Ed Royce of California, who are viewed as receptive to stricter SEC advisor regulation, according to advisor industry sources. Published reports today have indicated that Hensarling will not seek Cantor's post as majority leader, but that doesn't necessarily mean he might not take another position in a reorganized GOP House leadership. This morning, The Wall Street Journal's influential editorial had recommended either Hensarling or Rep. Paul Ryan as Cantor's replacement.
Two other candidates to succeed Hensarling, Capital Markets Subcommittee head Scott Garrett of New Jersey and North Carolina’s Patrick McHenry, have the same anti-regulation ideology as Hensarling and probably wouldn’t be receptive to stricter examinations of advisors by the SEC, sources said.
The House is expected to remain in Republican hands after the November elections, so all of the committee chairmanships would stay with the party for the next two-year session of Congress starting in January. Whether the Senate will stay in control by the Democrats is considered a toss-up.
In any case, a wholesale repeal of the Dodd-Frank Act is unlikely. Even the most voracious Republican critics of the law aren’t predicting majorities in both the House and the Senate large enough to override President Obama’s veto.