WASHINGTON — Ahead of a toss-up race for control of the House this fall, Speaker Paul Ryan’s decision to retire leaves the financial services industry in uncertain territory.
Wednesday’s announcement,
Ryan joins a wave of Republican lawmakers who have announced they will
In addition to Ryan, Rep. Dennis Ross, R-Fla., announced Wednesday that he would join those retiring at the end of the year. Ross, a member of the House banking panel, introduced a bill late last year to overturn the Consumer Financial Protection Bureau’s payday lending rule using the Congressional Review Act.
With leadership of the House now up for grabs by either party, the financial services industry is also bracing for a potentially dramatic shift in focus from lawmakers after eight years of solid GOP control. Should Democrats take control of the House, it’s likely that Rep. Maxine Waters, D-Calif., an outspoken critic of some of the country’s largest banks, is poised to take over the Financial Services Committee.
“It would be a radical shift in the view of regulation,” said Paul Merski, executive vice president for congressional relations and strategy at the Independent Community Bankers of America.
Yet most immediately, the industry remains focused on enacting a bipartistan bill — which has already passed the Senate but has some skeptics in the House — overhauling parts of the Dodd-Frank Act.
Hensarling, backed by GOP leaders, has said he will not move the legislation without allowing House members to put their imprint on the bill — a move that has frustrated some industry leaders anxious to see the bill signed into law.
With Ryan’s looming departure, House lawmakers could soon face additional calls to pass the bill well ahead of the midterm elections.
“If there is any doubt about a House majority post-election, there is already a deregulatory bill that's cleared the Senate with almost 70 votes, and there’s going to be a ton of pressure to get that cleared and signed into law,” said Edward Mills, a policy analyst with Raymond James.
Industry officials, however, said they remain confident that the legislation will be approved in coming months without getting tied up in the electoral melee.
“It's important to get regulatory relief done before [Ryan] leaves, but we feel pretty confident that the House and Senate will continue to have discussions and a bill will be put on the desk for the president’s signature,” said B. Dan Berger, president and chief executive of the National Association of Federally-Insured Credit Unions.
Ryan Donovan, chief advocacy officer for the Credit Union National Association, added that there’s been no indication that efforts to pass the bill will be negatively affected by Ryan’s announcement.
“The intention is for business to continue as usual — certainty this is a priority for a number of folks on both sides of the Capitol,” he said.
A spokeswoman for Majority Leader Kevin McCarthy’s office did not respond for a request for comment on the status of negotiations surrounding the regulatory relief bill.
Looking ahead to next year, it remains unclear which party will win a majority of seats in the House — although political analysts were quick to note that Ryan’s exit does little to help the GOP’s chances of retaining control of the chamber.
“There’s no question that the Ryan exit is another bad sign for GOP House prospects and a sign that Democrats probably have the inside track for taking control of the House, at least right now,” Kyle Kondik, managing editor of Sabato's Crystal Ball, published by the University of Virginia’s Center for Politics, wrote in a Wednesday
The increased odds that Waters could take over as chair of the Financial Services Committee is likely giving some in the industry heartburn, given the California lawmaker’s concerns about rolling back Dodd-Frank rules. She has served as ranking member on the panel since 2013.
“We view [Ryan’s retirement] as bad for financials because it is another signal that Democrats are likely to retake the House in the midterm elections,” Brian Gardner, a managing director at Keefe, Bruyette & Woods, said in a note to clients on Wednesday. “That means Rep. Maxine Waters (D-CA) is likely to be the next chair of the House Financial Services Committee, which we view as a negative for the banking industry and financials in general.”
Still, while Democratic control of the committee could spur tougher oversight of the industry and increase the potential for negative headlines, analysts noted that the party’s power would still be limited without control of the Senate, where a Democratic takeover is less likely. While a Democratic House shifts the balance of power in any legislative negotiations, a divided Congress would likely put more attention back on Trump-appointed regulators to relax banking standards.
“To the extent that one party doesn’t have control of Congress, that's where there's often a greater push to do things through the regulatory agencies,” said Mills. “With the current regulatory team being pretty pro-industry, in some ways, losing the majority puts more pressure on them to make the changes.”
