Banks could face tighter scrutiny under Rep. Maxine Waters
NEW YORK (AP) — Come January, the banking industry is going to be on Rep. Maxine Waters’ time.
With Democrats taking control of the House of Representatives, the California representative is expected to become chairwoman of the powerful House Financial Services Committee, which oversees the nation’s banking system and its regulators.
Waters is no friend to the nation’s biggest banks and Wall Street, and has been a vocal critic of President Donald Trump and his administration. The congresswoman from California has called for more regulation of banks, and has opposed Trump’s political appointees moving to roll back regulations on banks and other financial services companies.
For example, Waters, along with several other Democrats, were “no” votes on a banking industry bill that rolled back several parts of the Dodd-Frank Act, the law passed under President Barack Obama that more tightly regulated banks after the financial crisis. In the Senate, the bill was supported by several Democrats and was signed into law this summer by Trump.
With a Republican-controlled Senate and Trump in the White House, it is unlikely Waters’ proposed regulations on banks will make it into law. However, it’s also much less likely that any substantial new deregulatory bills get through, either.
Where Waters and Democrats will likely have the most power will be in her subpoena and investigatory powers that come as head of the committee.
One particular target for Waters will likely be the Consumer Financial Protection Bureau. Since Republicans took over the watchdog agency last year, the CFPB has made many about-faces on rules and regulations that it wrote under the Obama.
The CFPB has not faced much congressional oversight since Mick Mulvaney, Trump’s budget director and acting director of the 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 Bureau. If she is confirmed, which is likely since Republicans currently have a majority in the Senate and extended their gains in Tuesday’s election, any moves she and the bureau make will likely come under increased scrutiny of Waters’ committee.
Indeed, Waters indicated in a statement Wednesday that a priority will be “ensuring that the Consumer Financial Protection Bureau can be allowed to resume its essential role of protecting consumers from harmful practices without interference from the Trump Administration.”
Banks and their executives also are more likely to be called to testify in front of Congress. Democrats both in the House and Senate have been increasingly vocal about bringing scandal-plagued Wells Fargo in front of Congress again to discuss some of the bank’s more recent missteps.
There’s also likely to be more scrutiny of Deutsche Bank, which had been the primary financier of Trump’s business entities since before he became president.
Banking groups have said in interviews that they are eager to work on banking issues both parties can agree on. That could include student loans and other minor tweaks to laws on the books that govern how much capital banks are required to carry.
But there are things that will be outside of the control of Waters and congressional Democrats. Most banking laws give the regulators who oversee the industry — the Federal Reserve, CFPB, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation and others — wide authority to tailor regulations as needed. Nearly all of the positions at those regulators are now filled by Trump appointees.
Democrats could investigate and scrutinize any regulators’ changes. To do anything more substantial, like using the Congressional Review Act as Republicans did last year, would require cooperation from the Republican-controlled Senate and Trump’s signature.
Ken Sweet covers banks and the Consumer Financial Protection Bureau for The Associated Press. Follow him on twitter at @kensweet.