WASHINGTON — A quiet few years for bankers on the legislative front could be over under a second term of President-elect Donald Trump, experts said.
And the rules made in Congress in the next few years might not be what bankers are used to under a Republican-controlled government. A new vein of populist Republican lawmakers may find common ground with progressive Democrats who are looking to appeal to economically disaffected voters who didn't show up for them this election cycle.
Specifically, experts are looking at an unlikely power duo made up of Sens. Tim Scott, R-S.C., and Elizabeth Warren, D-Mass., atop of the Senate Banking Committee as an example of what new Washington policymaking on banking issues could resemble.
Scott — who was first appointed to serve in the Senate in 2012 before being elected in his own right in 2014 — is next in line to chair the committee, on which he currently serves as ranking member. If he is not pulled into the Trump administration, will likely be elevated from ranking member to chair on the Senate Banking Committee. Chairman Sen. Sherrod Brown, D-Ohio, lost his reelection campaign in Ohio, as did fellow senior banking committee Democrat Jon Tester, D-Mont.
Up next are Sens. Jack Reed, D-R.I., who is unlikely to give up his spot on Senate Armed Services, and Mark Warner, D-Va., who is also expected to remain atop the Senate Intelligence committee, given the military and intelligence industry's importance to the Democratic stronghold in Northern Virginia.
That would leave Sen. Elizabeth Warren, D-Mass., as Democrats' ranking member on Senate Banking. Banking and finance are one of Warren's top priorities in Congress; she first conceived of the Consumer Financial Protection Bureau and gave the bureau a high-profile shoutout in her victory speech last week.
While Scott and Warren make an unlikely pair, they might be an effective one. Without 60 votes to invoke cloture and block a filibuster, Republicans will need Democratic buy-in for any of their most sweeping measures.
"As long as the filibuster remains, bank regulation is going to need to have some bipartisanship," said Aaron Klein, a senior fellow at the Brookings Institute and chief economist for the panel under Chairman Sen. Chris Dodd, D-Conn. "And I think there's more areas of potential agreement between Senators Warren and Senator Scott than most people think."
Some of those areas of agreement include anti-money-laundering legislation and housing issues, Klein said.
And while the Senate can't enact legislation on its own, the House Financial Services Committee may be willing to play ball in the next Congress. Rep. Maxine Waters, D-Calif. — who will either be the chair or ranking member of the committee, depending on which party ultimately wins a majority — has shown a willingness to work with Republicans, specifically on issues that touch on cryptocurrency and stablecoins. While her erstwhile counterpart, Rep. Patrick McHenry, R-N.C., did not seek reelection in 2024, there is reason to think that whomever does lead the committee for Republicans will keep an open mind about bipartisan legislative initiatives originating in the Senate.
Scott in particular will represent a break from traditional Republican banking interests on the Senate Banking Committee, said Jennifer Schulp, director of financial regulation studies at the Cato Institute.
"Tim Scott has been laying out his agenda for Senate Banking, which doesn't always look like a heavy traditional Republican agenda," she said. "Tim Scott's got a very specific set of things he likes to focus on, including housing, and a lot of opportunity issues."
And with Washington potentially entering an era of unified Republican control in the White House and both houses of Congress, the conditions could be ripe for earnest legislating to be done, which could bring lawmakers to the table who might otherwise sit out for partisan reasons.
"If you have [party] unity across three branches, you won't have the same push-and-pull with executive actions being met by Congressional action and trying to figure out a way to undo it," she said. "It kind of opens up Congress to focus on their own individual priorities, and we just don't know what that's going to look like yet."
Specifically, bankers should look to the expiring Trump tax cuts — which Republicans will need to extend or allow taxes on low-and-middle-income Americans to increase significantly — early in Trump's term as a bellwether for how banking interests are incorporated into the new Congress's politics.
Republicans will likely look to expedite the passage of those tax breaks via reconciliation.
"That means they can avoid the Senate filibuster rules by creating the budget reconciliation process, and they'll probably go it alone," said Peter Roskam, a partner at Baker Hostetler and former Republican representative in the U.S. House from Illinois who served as tax policy subcommittee chairman on the Ways and Means Committee. "That frames up a different environment, which creates a vulnerability for banks."
He said that banks could be vulnerable to the ways that Republicans look to pay for the tax cuts via higher taxes.
"They'll be vulnerable to pay-fors, and these could be esoteric things that are not well understood by the public," he said. "There's a populist sentiment within the GOP that's fairly new, and yet it's significant."
And while the specific revisions that might impact banks have not yet been articulated, bankers should anticipate that lawmakers will prioritize their interests lower than they have in the past, Roskam said.
"Who is going to hold a candlelight vigil for the banks?" he said. "If it's between middle-income tax relief and the banks, the banks are going to lose."
