Following the US elections the Democrats hold a majority in the Senate while the Republicans have a majority in the House. Stalemates could continue, but there is also the chance for reform of the financial services industry, says Mike Castle
Following the 6 November election in the US the Democratic party holds a narrow majority in the Senate and the Republican party holds a majority in the House of Representatives. The breakdown remains largely unchanged and Washington faces a split government again.
One might expect the same stalemates to continue. However, the day after and, to a lesser extent, in the weeks and months leading up to the election, leaders such as Senator Mark Warner (Democrat, Virginia) acknowledged that changes to the Dodd-Frank Act – the so-called Wall Street Reform Act – are appropriate, marking a deviation from earlier positions espoused by the Democrats.
For the financial services industry, the election of Elizabeth Warren (Democrat, Massachusetts) to the Senate may be one of the most meaningful changes arising from the election. Warren was instrumental in the design and creation of the Bureau of Consumer Financial Protection – a particularly objectionable element of the Dodd-Frank Act for Republicans and industry.
During the drafting, Warren was a special advisor to President Obama and played a de facto role as head of the bureau during its formative days. She can be expected to join the Senate Banking Committee when it is reformulated in 2013, with Senators Daniel Akaka (Democrat, Hawaii) and Herb Kohl (Democrat, Wisconsin) retiring from the committee. She would likely oppose any reduction to the bureau’s authority. Senator Richard Shelby (Republican, Alabama) is the Republican Ranking Member of the Committee and is term-limited under the Republican rules. He will likely be replaced by Senator Mike Crapo (Republican, Idaho), who is knowledgeable about financial issues.
While election results may not reflect the outcome desired by the financial service industry, they could forecast an opportunity for constructive discussions on reform if change benefits the market and consumers.
Mike Castle is a partner at DLA Piper. He is a former nine-term Republican Congressman and two-term Governor of Delaware