The results of yesterday’s midterm election shifted the balance of power in Congress, which could mean some changes in store for the financial services industry.
The biggest change occurred in the House of Representatives, where Democrats gained control of the majority. With this change, it is likely that Rep. Maxine Waters (D-CA) will be the next chair of the House Financial Services Committee. After the resignation of the Bureau of Consumer Financial Protection’s (BCFP or Bureau) student loan ombudsman, Rep. Waters introduced a House bill criticizing the Bureau’s leadership under Acting Director Mick Mulvaney. Rep. Waters will likely keep a sharp eye on regulators appointed by President Donald Trump.
Another change for the House Financial Services Committee is that one of its members, Rep. Keith Rothfus (R-PA), lost re-election yesterday to a Democratic candidate, Conor Lamb (D-PA).
Republicans maintained the majority in the Senate. Sherrod Brown (D-OH), the ranking member of the Senate Banking Committee, was re-elected. Of note for the ARM industry, the full senate confirmation vote for Kathy Kraninger as the next director of the BCFP is pending. The Senate Banking Committee voted squarely along party lines to approve Kraninger's nomination. If the full Senate follows suits, her confirmation is likely to go through.
Since there is now a divide in control of the House and the Senate, one thing we may not see again for a while is the use of the Congressional Review Act (CRA) to stop regulatory rules. Back in 2017, the CRA was used to kill the BCFP’s arbitration rule. At that time, Republicans held the majority in both the House and Senate. This is good news for the debt collection industry, which has been asking the BCFP for guidance on how to comply with the Fair Debt Collection Practices Act in the modern world. Currently, the Bureau’s third-party debt collection rules are set to be released in March 2019. If the CRA is not used to stop the rules, then the industry will recieve the comprehensive guidance it has been waiting for.
One other election result that might be of interest to the industry is that Richard Cordray, the BCFP's former director, lost the Ohio gubernatorial race. Former director Cordray stepped down from the top role at the Bureau in November 2017 to run for the role of Ohio’s governor.