WASHINGTON – Chair of the House Financial Services Committee, Maxine Waters, braces for a louder megaphone as President-elect Joe Biden moves into the White House in January.
After the California Democrat compiled a comprehensive list of policy recommendations and rule changes that she believes Biden-appointed regulators should administratively monitor, observers say Waters wants more power now that the White House is in the hands of the Democrats. She has chaired the committee for the past two years with the White House and Senate in GOP control, but Biden's win in November gives Waters more leverage in policymaking.
"By sending this letter now, Chairwoman Waters can influence the transition team's agenda. She can influence nominees' priorities even before they go to their nomination hearings," said Jeremy Kress, assistant professor of business law at the University of Michigan. "This letter will be on the top of the pile when the incoming regulatory team sits down and says," Okay, what are our priorities? "You must be careful of the actions Chairman Waters described."
House Financial Services chairman Maxine Waters is likely to have leverage as Biden-appointed regulators develop policies to address economic inequality issues, observers said.
A former Republican House Financial Services Committee employee said the Biden administration will likely contact Waters if banking issues arise because financial services are not a personal priority for Biden.
"I think there are many factors that lead me to believe that she will have a loud voice in the White House," said the former Republican employee of the House. “You see the fact that Biden is not personally passionate about financial services issues. … That leaves a little void and I think the Chair is trying to fill that void. I would expect some of your current and former employees to be considered for really important positions within the administration. "
Waters urges the von Biden administration to aggressively enforce fair lending laws at the Bureau of Consumer Financial Protection and the Department of Housing and Urban Development, strengthen capital requirements at major banks, and amend the Community Reinvestment Act and the Volcker Rule in Trump -Era undo. and prioritize climate change, among other things, in the context of the supervision of financial institutions.
Waters employees will likely have better access to finance staff in a Biden administration as well as at the regulator level.
The former Republican employee said that when the House Republicans were in control of the chamber at the beginning of the Trump administration, they had a close relationship with the Treasury Department and financial regulators.
"There was a real connection between the committee and the administration and also with the regulators," said the former Republican employee of the House. "At a high level, there was a lot of connectivity and fairly regular conversations between Congress and the administration."
But Waters' real power will still be their gavel on the House Financial Services Committee, others said. She will not be able to attend confirmation hearings for Biden-appointed regulators, which will be conducted by the Senate, but she will be able to hold hearings where she can urge regulators into rules.
"I really think her ability to influence depends on how willing she is to use her platform for committee chairs to put pressure on her publicly," said a former Democratic Senate employee. "It's not like the Senate, where you are in control of the nominations."
The former Democratic Senate employee added that Waters' letter to Biden is an early signal of the kind of questions she will be asking during the hearings. For example, Waters could criticize a Biden-appointed CFPB director if enforcement actions don't pick up, or she could ask Federal Reserve officials why bank mergers aren't being scrutinized as closely as they'd like.
"It's an indication that if they don't do these things, I think it's their way of saying, 'Hey, I warned you, these are the things I think are really important.' ; "said the former Democratic Senate employee.
Waters' letter to Biden has a rather ambitious financial services agenda. She says Biden should fire the director of the Consumer Financial Protection Bureau, Kathy Kraninger, and the director of the Federal Housing Finance Agency, Mark Calabria. She is asking the administration to repeal the CFPB's payday loan and collection rules, among other things. And she's calling on the government to halt plans to remove government-sponsored companies Fannie Mae and Freddie Mac from the conservatory.
Travis Norton, attorney at Brownstein Hyatt Farber Schreck and former general counsel of the Republican Financial Services Committee, said Waters is likely to be pushing an aggressive rulemaking agenda as it will be difficult for Democrats to pass laws with a leaner house majority that the Senate in Republican hands can hold.
"I expect Chairwoman Waters to urge the administration to make regulatory changes that are more difficult to implement legally," said Norton. “Progressives will have an uphill battle over some of their ideas in the next Congress, but Chairwoman Waters will have a very loud megaphone and a very prominent voice when she tries to manage financial services policy from just her seat on the Financial Services Committee. ”
The former Democratic Senate employee 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 some time, if they step down, the House majority for Democrats will be [approximately] 220," said the former Democratic Senate employee. "It's an obviously narrow, narrow majority because [House Speaker Nancy] Pelosi can only lose two votes on something. … If Maxine had a hard time getting something through the committee last year, it only got harder."
It is unlikely that the Biden administration will be able to take action on all of the issues listed by Waters. However, Isaac Boltansky, director of policy research at Compass Point Research & Trading, said changes Waters proposed to the CFPB rulebook could come into effect.
“The overall focus on administrative measures gives this document at least a viable shot on target. … I think a lot of these things can be done very quickly, ”said Boltansky. "I don't think there is a CFPB observer who thought the next government would leave the payday loan rule alone."
Norton said Waters is likely to have leverage as Biden regulators develop policies to address economic inequality issues.
"I think one of the ways it will impact governance is to encourage financial regulators to consider issues of race and gender diversity and inequality in the financial services industry," said Norton.
And the former Republican House employee said Waters could influence the political agenda surrounding the GSE Conservatory. While plans to fire Fannie Mae and Freddie Mac from the Conservatory may depend on a Supreme Court case to determine whether a president can fire a sitting FHFA director "at will," lawmakers on both sides have concerns stated that the GSEs are leaving the conservatory.
"I think there are bipartisan concerns about the idea that given their current capital structure, they will be released immediately," said the former Republican employee of the House. “I think her interest in slowing this process down is actually one that she will win at. Ultimately, I think that despite their great affection for [FHFA director Mark Calabria], Republicans have real concerns about the impact on the market if companies are laid off too early. "