Banks could face stricter scrutiny under Rep. Maxine Waters
Banks could face stricter scrutiny under Rep. Maxine Waters
In January, the banking industry will be in the time of Rep. Maxine Waters.
With the Democrats taking control of the House of Representatives, the representative of California is expected to become the president of the House's powerful Financial Services Committee, which oversees the nation's banking system and its regulators.
Waters is not a friend of the nation's and Wall Street's biggest banks, and has been an enthusiastic critic of the president Donald Trump and its administration. The California congresswoman has called for more regulation of banks, and has opposed Trump's political appointments to reverse regulations on banks and other financial services companies.
For example, Waters, along with several other Democrats, was "no" to the votes in a banking industry bill that reversed several parts of the Dodd-Frank Act, the law passed by the President Barack Obama That the banks are more regulated after the financial crisis. In the Senate, the bill was supported by several Democrats and was enacted this summer by Trump.
With a Senate controlled by the Republicans and Trump in the White HouseIt is unlikely that the regulations proposed by Waters on banks will become law. However, it is also much less likely that any new deregulation bill will be approved.
Where Aguas and Democrats probably have more power will be in their subpoena and in the investigative powers that come as heads of the committee.
A particular goal for Waters will likely be the Consumer Financial Protection Office. Since the Republicans took control of the control agency last year, the CFPB has made many changes to the rules and regulations that it wrote under Obama.
The CFPB has not faced much supervision by Congress since Mick mulvaney, The budget director of Trump and the interim director of CFPB, took over. Trump has nominated Kathy Kraninger, who worked under Mulvaney in the Office of Management and Budget, to be the next permanent director of the Office. If it is confirmed, which is likely since Republicans currently hold a majority in the Senate and extended their gains on Tuesday. choiceAny movement that she and the office make will be subject to greater scrutiny by the Waters committee.
In fact, Waters said in a statement on Wednesday that a priority will be "to ensure that the Consumer Financial Protection Bureau can be allowed to resume its essential function of protecting consumers from harmful practices without interference from the Trump Administration."
Banks and their executives are also more likely to be called to testify before Congress. Democrats, both in the House of Representatives and in the Senate, have been increasingly vocal about bringing Wells Fargo full of scandals back to Congress to discuss some of the bank's most recent mistakes.
There is also likely to be greater scrutiny from Deutsche Bank, which had been the main funder of Trump's business entities since before he assumed the presidency.
Banking groups have said in interviews that they are eager to work on banking issues that both parties can agree on. That could include student loans and other minor modifications to the laws in the books that govern the amount of capital that banks must carry.
But there are things that will be beyond the control of Waters and the Democrats in Congress. Most banking laws give regulators that oversee the industry (the Federal Reserve, the CFPB, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation and others) authority to adapt the regulations as necessary. Almost all positions in those regulators are now occupied by people appointed by Trump.
Democrats could investigate and analyze changes in regulators. To do something more substantial, like using the Congressional Review Act as Republicans did last year, would require the cooperation of the Republican-controlled Senate and Trump's signature.
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Ken Sweet covers the banks and the Consumer Financial Protection Office for The Associated Press. Follow him on twitter at @kensweet.
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