WASHINGTON — House Financial Services Committee Chair 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 a long list of policy recommendations and rule changes she thinks Biden-appointed regulators should pursue administratively, observers say Waters is seeking to wield more power now than the House Blanche is in the hands of the Democrats. She has led the committee for the past two years with the White House and Senate under GOP control, but Biden’s victory in November gives Waters more leverage to create policy.
“By sending this letter now, President Waters can influence the scheduling of the transition team, she can influence the priorities of candidates even before they show up for their nomination hearings,” said Jeremy Kress. , assistant professor of business law at the University of Michigan. “This letter will rise to the top of the pile when the incoming team of regulators sit down and say, ‘Okay, what are our priorities?’ They are going to have to pay attention to the actions described by President Waters. »
A former staffer on the Republican House Financial Services Committee said the Biden administration will likely turn to Waters when banking policy issues arise because financial services are not personal priorities for Biden.
“I think there are a lot of factors that lead me to believe that she’s going to have a strong 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. … It leaves a little void and I think the president is trying to fill that void. I would expect a number of its current and former employees to be considered for really important positions within the administration.
Waters calls on the Biden administration to aggressively enforce fair lending laws at the Consumer Financial Protection Bureau and the Department of Housing and Urban Development, tighten capital requirements for the largest banks, reverse Trump-era changes to the Community Reinvestment Act and the Volcker Rule, and prioritize climate change as part of the supervision of financial institutions, among others.
Waters staffers are likely to have increased access to Treasury Department staffers in a Biden administration, as well as at the regulatory agency level.
The former Republican staffer said House Republicans, when they controlled the chamber early in the Trump administration, had a close relationship with the Treasury Department and financial regulators.
“There was real connectivity between the committee and the administration and including with regulators,” the former House Republican staffer said. “At a high level, there was a lot of connectivity and fairly regular conversations between Congress and the administration.”
But Waters’ real power will always be his hammer at the top of the House Financial Services Committee, others said. She won’t be able to participate in Biden’s confirmation hearings for regulatory appointments, which are handled by the Senate, but she will be able to hold hearings where she can lobby regulators on rulemaking.
“I really think her ability to influence has to do with how willing she is to use her committee chair platform is a way to pressure them publicly,” a former Senate staffer said. democrat. “It’s not like the Senate where you have control over the appointments.”
The former Democratic Senate staffer added that Waters’ letter to Biden is an early signal of the kinds of questions she will ask during the hearings. For example, Waters could criticize a Biden-appointed CFPB director if enforcement action doesn’t increase or she could question Federal Reserve officials about why bank mergers aren’t being scrutinized as strictly as she does. would like.
“It’s an indication that if they’re not doing these things, then I think that’s also his way of saying, ‘Hey, I warned you, these are things that I think are really important. “,” the former Democratic Senate staffer said. .
Waters’ letter to Biden sets out a pretty ambitious financial services agenda. She says Biden should fire Consumer Financial Protection Bureau director Kathy Kraninger and Federal Housing Finance Agency director Mark Calabria. It calls on the administration to repeal, among other things, the CFPB’s payday loan and debt collection rules. And she’s calling on the administration to suspend plans to release government-sponsored companies Fannie Mae and Freddie Mac from conservatorship.
Travis Norton, an attorney at the Brownstein Hyatt Farber Schreck and former general counsel for the Republican Financial Services Committee, said Waters is likely pushing an aggressive regulatory agenda because it will be difficult for Democrats to pass legislation with a smaller majority to the House, the Senate being possible in the hands of the Republicans. .
“I expect President Waters to push the administration to seek to make policy changes through regulation that are harder to make legislatively,” Norton said. “Progressives will have an uphill battle in the next Congress for some of their ideas, but Speaker Waters will have a very loud megaphone and a very prominent voice to try to shape financial services policy through just administration since her perch at the Financial Services Committee.”
The former Democratic Senate staffer said a number of House Democrats are being considered for positions in Biden’s cabinet, meaning their absence from Congress will give Democrats an even smaller majority in the chamber to pass laws.
“For a while, whenever they step down, the majority of Democrats in the House will be [roughly] 220,” the former Democratic Senate staffer said. “It’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 got harder.
The Biden administration is unlikely to be able to take action on all of the items Waters listed. But Isaac Boltansky, director of policy research at Compass Point Research & Trading, said Waters’ proposed changes to CFPB rules could materialize.
“The overall focus on administrative actions at least gives this document a viable shot at the goal. … I think a lot of these things can be done very quickly,” Boltansky said. “I don’t think there was a CFPB watcher who thought the next administration was going to leave the payday loan rule alone.”
Norton said Waters is likely to be influential when Biden regulators craft policy to address issues of economic inequality.
“I think one of the ways she will influence 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 Waters could influence the political agenda around the GSE trusteeship. 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 on both sides have said expressed their concern about the exit of the GSE from supervision.
“I think there’s a bipartisan concern around the idea that they would be released now, given their current capital structure,” the former House Republican staffer said. “I think her interest in slowing down this process is actually where she’s going to win. In the end, Republicans, despite their great affection for [FHFA Director Mark Calabria]I think there are real concerns about the market implications if companies are released too soon.