House Democrats Can Rein in Banks, But Not Deregulation
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whelan at The Wall Street Journal in New York.
How will a Democratic House change congressional oversight of big banks?
A Democratic House of Representatives means that Congress as a whole won't be as cozy with the big banks as it was in the past two years. We'll explain where Democratic lawmakers would like to make changes in a moment. First, these money and market stories you should know.
What short-term market and mortgage trends should listeners know now?
The 30-year fixed rate mortgage averaged 4.94% in the week of November the 8th. That's a gain of 11 basis points and the highest level for the 30-year since February of 2011. The 15-year fixed-rate mortgage averaged 4.33%, and the five-year Treasury-indexed hybrid adjustable rate mortgage averaged 4.14%, both up 10 basis points during the week. And the midterm elections shifted the health care landscape across the country, strengthening the position of the Affordable Care Act and resulting in a divided Congress that could mean most changes take place at the state level. The results help cement the Obama-era health law as a part of the national landscape. With the Democrats in control of the House, Republicans won't be able now to resurrect or repeal of the so-called Obamacare law, while a GOP effort to overhaul or curtail Medicaid funding to the states will probably also be put on hold.
When Democrats officially take control of the House of Representatives in January, they're expected to put Wall Street and the big banks in their crosshairs. But Wall Street Journal reporter Ryan Tracy joins us to explain why they won't be able to stop the wave of banking deregulation.
Why won't House Democrats be able to fully reverse recent banking deregulation?
So Ryan, as much as politicians promise to end gridlock in Washington, it's the partisan bickering that's likely to keep deregulation in place?
We've got a situation where the Democrats are going to control the House Financial Services Committee, which is the primary committee overseeing Wall Street and its regulators. And the Republicans are going to control the Senate Banking Committee. And there's likely to be limited areas where they can agree on legislation. And if Congress isn't going to pass new laws, the laws that are already in place are going to govern what regulators can do. And Congress has already delegated to regulators a lot of authority to write the rules of the road for banks and for insurance companies, for credit cards, and a whole host of other issues. So we expect gridlock, and therefore we expect the status quo to continue, which means the regulators hold the pen.
Which banking rules and agencies will Democrats target first in hearings?
But aside from deregulation, there are plenty of areas of banking rules that House Democrats will aim to rewrite.
Yes, they'll certainly give it a shot. For example, there are rules on payday lending that have been quite controversial recently. out of the Consumer Financial Protection Bureau. Democrats are very concerned about the Republican leader of that regulator and his efforts to roll back those rules. And so they'll certainly hold hearings. They will possibly even subpoena him to try to find records about what he's doing that they can use to try to throw a roadblocks in the way of the individual leading that agency.
How might Rep. Maxine Waters use the Financial Services Committee to pressure Wall Street?
But at the end of the day, unless they pass legislation, they won't be able to stop the changing those rules, and they can't pass legislation without Republicans in the Senate coming along.
And the head of that bureau is likely to face one of the most vocal Democratic critics of the banks, and that's Congresswoman Maxine Waters.
That's right. She's the likely chair of the House Financial Services Committee. She's been around a long time, since the early 1990s, representing the Los Angeles area. And she is a liberal Democrat.
What bipartisan issues (like flood insurance) will force cooperation in Congress?
She's been very outspoken in her criticism of President Trump and also of regulators that Mr. Trump has appointed. And we expect it to be, you know, a fairly aggressive posture that she takes when it comes to overseeing Wall Street and when it comes to calling officials up to her committee and using the subpoena power that comes with the chairman's gavel.
You know, you're right in your story in the Wall Street Journal that one of the things that the Democrats would like to address are racial comments or comments thought to be racial by the head of that bureau.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How will a Democratic House change congressional oversight of big banks?
0:09–0:22
3
What short-term market and mortgage trends should listeners know now?
0:22–1:43
4
Why won't House Democrats be able to fully reverse recent banking deregulation?
1:43–2:31
5
Which banking rules and agencies will Democrats target first in hearings?
2:31–3:08
6
How might Rep. Maxine Waters use the Financial Services Committee to pressure Wall Street?
3:08–3:39
7
What bipartisan issues (like flood insurance) will force cooperation in Congress?
3:39–6:17
Speakers
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