Banking

Biden win gives Maxine Waters a power boost

WASHINGTON — House Financial Services Committee Chairwoman Maxine Waters is preparing to have a louder megaphone when President-elect Joe Biden moves into the White House in January.

After the California Democrat compiled an extensive list of policy recommendations and rule changes that she thinks Biden-appointed regulators should pursue administratively, observers say Waters is looking to exert more power now that the White House is in Democrats’ hands. She has led the committee for the past two years with the White House and Senate in GOP control, but Biden’s victory in November gives Waters more influence to create policy.

“By sending this letter now, Chairwoman Waters can influence the transition team’s agenda setting, she can influence the priorities of the nominees even before they go up for their nomination hearings,” said Jeremy Kress, an assistant professor of business law at the University of Michigan. “This letter will rise to the top of the stack when the incoming team of regulators sits down and says, ‘Okay, what are our priorities?’ They are going to have to pay attention to the action items that Chairwoman Waters describes.”

House Financial Services Chairwoman Maxine Waters will likely be influential when Biden-appointed regulators are crafting policy to address issues of economic inequality, observers said.

Bloomberg

A former Republican House Financial Services Committee staffer said that the Biden administration will likely look to Waters when banking policy issues arise, because financial services aren’t personal priorities for Biden.

“I think there are a lot of factors that lead me to believe that she is going to have a loud voice in the White House,” the former House Republican staffer said. “You look at the fact that Biden is not personally passionate about financial services issues. … That leaves a little bit of a void and I think that the chairwoman is trying to fill that void. I would expect that a number of her current and former staff are being considered for really significant posts inside the administration.”

Waters calls on the Biden administration to aggressively enforce fair lending laws at the Consumer Financial Protection Bureau and the Department of the Housing and Urban Development, strengthen capital requirements at the largest banks, reverse Trump-era changes to the Community Reinvestment Act and Volcker Rule, and prioritize climate change as part of oversight of financial institutions, among other things.

Members of Waters’ staff will likely have increased access to staffers at the Treasury Department in a Biden administration, as well as at the regulatory agency level.

The former Republican staffer said that House Republicans, when they were in control of the chamber at the beginning of the Trump administration, had a close relationship with the Treasury Department and financial regulators.

“There was a real connectivity between the committee and the administration and including with the regulators,” the former House Republican staffer said. “At a high level, there was a lot of connectivity and pretty regular conversations between Congress and the administration.”

But Waters’ true power will still be her gavel atop the House Financial Services Committee, said others. She won’t be able to participate in confirmation hearings for regulatory appointees by Biden, which are handled by the Senate, but she will be able to hold hearings where she can press regulators on rulemakings.

“I think really her ability to influence is tied to how much she is willing to use her committee chair platform is a way to put pressure on them publicly,” said a former Democratic Senate staffer. “It’s not like the Senate where you have control of the nominations.”

The former Democratic Senate staffer added that Waters’ letter to Biden is an early signal of the types of questions she will ask during hearings. For example, Waters could criticize a Biden-appointed CFPB director if enforcement actions don’t increase or she could question Federal Reserve officials about why bank mergers aren’t being scrutinized as strictly as she would like.

“It’s an indication that if they don’t do these things, then I believe it’s also her way of saying: ‘Hey, I warned you, these are the things that I think are really important,'” the former Democratic Senate staffer said.

Biden win gives Maxine Waters a power boost

Waters’ letter to Biden sets out a fairly ambitious financial services agenda. She says that Biden should fire Consumer Financial Protection Bureau Director Kathy Kraninger and Federal Housing Finance Agency Director Mark Calabria. She calls on the administration to rescind the CFPB’s payday lending and debt collection rules, among other things. And she calls on the administration to halt plans to move the government-sponsored enterprises Fannie Mae and Freddie Mac out of conservatorship.

Travis Norton, an attorney at Brownstein Hyatt Farber Schreck and former Republican Financial Services Committee general counsel, said that Waters is likely pushing an aggressive rulemaking agenda because it will be difficult for Democrats to pass legislation with a slimmer House majority the Senate possible in Republican hands.

“I expect Chairwoman Waters to push the administration to seek to do by regulation policy changes that are more difficult to do legislatively,” Norton said. “Progressives will have an uphill battle in the next Congress for some of their ideas, but Chairwoman Waters will have a very loud megaphone and a very prominent voice in trying to shape financial services policy through the administration just from her perch at the Financial Services Committee.”

The former Democratic Senate staffer said that a number of House Democrats are being considered for positions in Biden’s cabinet, which means that their absence from Congress will give Democrats an even slimmer majority in the chamber to pass legislation.

“For some period of time, whenever they resign, the House majority for Democrats will be [roughly] 220,” the former Democratic Senate staffer said. “That’s an obviously narrow, narrow majority, because [House Speaker Nancy] Pelosi can only lose two votes on something. … If it was hard for Maxine to get something through the committee last year, it just got harder.”

It is unlikely that the Biden administration will be able to take action on all of the items Waters has listed. But Isaac Boltansky, director of policy research at Compass Point Research & Trading said that changes Waters proposed to CFPB rulemakings could come to fruition.

“The focus by and large on administrative actions at least gives this document a viable shot on goal. … I do think a fair amount of these things can be done very quickly,” Boltansky said. “I don’t think there is any CFPB observer who thought that the next administration was going to leave the payday loan rule alone.”

Norton said Waters will likely be influential when Biden regulators are crafting policy to address issues of economic inequality.

“I think one of the ways in which she will have influence over the administration is to encourage financial regulatory agencies to consider issues of racial and gender diversity and inequality in the financial services industry,” Norton said.

And the former Republican House staffer said that Waters could influence the policy agenda around GSE conservatorship. While plans to release Fannie Mae and Freddie Mac from conservatorship could hinge on a Supreme Court case that will determine whether a president can fire a sitting FHFA director “at will,” lawmakers from both parties have expressed concerns about the GSEs exiting conservatorship.

“I think there is bipartisan concern around the idea that they would be released right now, given their current capital structure,” the former House Republican staffer said. “I think that her interest in slowing that process down is actually one that she is going to win on. At the end of the day, Republicans, despite having a great affection for [FHFA Director Mark Calabria], I think there are real concerns about market implications if the enterprises are released too early.”



 

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