Wall Street, fasten your seat belts.
Now that Democrats have taken control of the House, Representative Maxine Waters is in line to lead the financial services committee, a panel with significant clout over banks, investment firms and their regulators.
She’s pledged an aggressive agenda that could trigger unwelcome headlines for the finance industry: holding lenders accountable for abusing consumers, launching fresh investigations into companies such as Wells Fargo & Co. and Equifax Inc., and scrutinizing bank-friendly watchdogs installed by President Donald Trump.
Yet if Wall Street can endure bouts of turbulence, it will probably stay on the same pleasant flight pattern that has defined much of Trump’s first two years in office. That’s because Democrats lack the votes in the Senate to get their legislative priorities through Congress, such as repealing the president’s tax cuts. Also, Waters can harass the Federal Reserve and other regulators, but she can’t stop them from rolling back rules passed after the 2008 financial crisis.
“There will be a lot of YouTube moments, but not a lot of bill-signing moments,” said Richard Hunt, president of the Consumer Bankers Association. “There will be reputational risk, and it will be legislative light.”
If Waters, 80, hopes to notch any policy victories, lobbyists say she will have to focus on less-controversial issues that appeal to moderate Democrats and even some Republicans.
While it’s difficult to see bitterly divided lawmakers forging compromises, lobbyists argue there could be deals struck on overhauling Fannie Mae and Freddie Mac’s role in the housing market and making it easier for technology companies to compete with banks in offering financial services.
“She can be a tough dealmaker on Capitol Hill, and it’s likely she’s going to be looking to make some deals on a number of things,” said Dan Berger, president of the National Association of Federally-Insured Credit Unions.
Representative Patrick McHenry is in line to be the panel’s top Republican. The North Carolina congressman has said he and Waters have a good working relationship, and they agree on some issues, including that it should be easier for startup companies to raise money from investors.
In the Senate, Idaho Republican Mike Crapo is poised to remain chairman of the Banking Committee. But if the GOP shakes up the leadership of other panels, he could end up running the Finance Committee, which handles tax policy. If Crapo does move on from banking, Pennsylvania Senator Pat Toomey, a longtime ally to the financial industry, is scheduled to take the gavel.