ICBA 2018 Election Analysis: Midterm Elections Create Opportunity for Community Bank Priorities
Below is an initial analysis of the 2018 mid-term election results and
the potential impact on the community banking sector. A change of party
control in the House will sharpen oversight of the Administration and
bring a raft of new policy initiatives. At the same time, the
Republicans strengthened their control of the Senate, and the
presidential veto power will be an obstacle to House-passed
legislation. Key agencies will continue to be in a position to advance
regulatory relief. ICBA supports community bank-friendly candidates in
a bipartisan fashion and is well positioned to advance the public
policy objectives of community banks.
Overview of Results
Voters delivered narrow control of the House to Democrats with a pick-up of
at least 21 seats, bringing their current total to 220 seats (with 21 races
still undecided) and making Nancy Pelosi (D-Calif.) the presumptive Speaker
of the House in the 116th Congress. Republicans increased their
margin of control in the Senate by winning key competitive races and
picking up at least two seats. Two Senate races remain undecided (Florida
and Arizona), and Mississippi goes to a runoff. Sen. Mitch McConnell
(R-Ky.) is expected to continue as majority leader. Democrats had a net
gain in governors' races but fell short of expectations. Of note, former
CFPB Director Richard Cordray failed to win the governorship in Ohio.
The elections usher in a return to a divided Congress following two years
of unified Republican control and an ambitious legislative agenda that
included needed community bank regulatory relief and major tax cuts.
Divided government means legislation will require greater bipartisan
cooperation and compromise—or gridlock and inaction will dominate. We have
models for both in recent history. Think of President Bill Clinton working
with a Republican Congress in the 1990s to reform welfare and balance the
federal budget—or recent standoffs over the budget or the debt limit that
have led to government shutdowns.
Republican losses were heaviest in the suburbs of New York, New Jersey,
Pennsylvania, Chicago, Texas, and Orange County, Calif., as well as
scattered Midwestern swing districts carried or lost narrowly by Hillary
Clinton in 2016. Most of the losses were among moderate Republicans,
leaving a more conservative Republican caucus for the 116th
Congress. Newly elected Democrats are predominantly centrist, with notable
exceptions, and many are veterans. As we enter the coming presidential
cycle, expect sharpened rhetoric and continued polarization.
Control of the House will provide the Democrats with a formidable bully
pulpit. Democratic leadership will set the agenda for all the committees
and the House floor and thereby exert a powerful influence on the public
discourse over the next two years. Each party will try to drive a message
to help them capture the White House and add Congressional seats in 2020.
Both parties will have to balance appeals to centrist voters with appeals
to their base.
ICBA is well positioned.
The cyclical nature of party control makes it important to build strong
relationships with elected officials and candidates from both sides of the
aisle. We have spent considerable time and resources developing positive
working relationships with members of Congress on both sides of the aisle.
ICBA is bipartisan, and our political action committee contributions are
determined through criteria that support ICBA's objectives while
recognizing the need for balance to be successful legislatively.
Lame Duck Session
The House and Senate will return to Washington on Nov. 13 to address
the unfinished business of the 115th Congress in a "lame duck"
session. This business includes:
Budget authority expires Dec. 7. A government shutdown over funding for
a border wall remains possible.
Congress will try to complete negotiations on the Farm Bill, but they
may just extend program authority until 2019.
. Authority expires Nov. 30. The most likely outcome is an extension
into next year.
Federal Reserve Board seat
. Kansas Banking Commissioner Michelle Bowman's nomination to fill the
community banker seat on the Federal Reserve will get a vote on the
Senate floor during the lame duck. ICBA helped create the designated
community banker seat in 2014.
In general, Democrats will try to block any significant lame duck
legislation because they will have more leverage in the new Congress.
U.S. House in the 116th Congress
Presumptive Speaker Pelosi will have a relatively narrow margin of 10 to 15
votes; she'll need the support of the centrist New Democrats and
conservative Blue Dogs to pass legislation. We expect House committees to
focus on oversight of Administration ethics, agency actions, and numerous
other issues. The House will likely pass a series of "message" bills with
no expectation that they will be taken up by the Republican-controlled
Senate. Speaker Pelosi's agenda is expected to include immigration reform,
background checks and other gun restrictions, drug pricing, protecting
Obamacare, and campaign finance reform.
Below is a preview of who will potentially chair House committees relevant
to community banks. In many cases there are two or more candidates for the
chairmanship. We expect chairmen to be named as soon as Thanksgiving and
likely before year-end.
Financial Services Committee
Rep. Maxine Waters (Calif.), the current senior Democrat and one of the
most progressive members of the committee, is the presumptive chairman.
Either Rep. Patrick McHenry (N.C.) or Rep. Blaine Luetkemeyer (Mo.) is
likely to be ranking member. Republican losses and retirements have created
a large number of vacancies, up to a third of the committee. We expect
Chairman Waters to focus on criticism of the largest banks and Wall Street
firms as well as scrutiny of Bureau of Consumer Financial Protection rules,
enforcement, and administration. We also expect that Bank Secrecy Act
reform, fintech policy, data security, the SAFE Act (cannabis banking), the
Community Reinvestment Act, housing and GSE reform will rank high on the
committee agenda, and among these issues there may be opportunities to
advance community bank interests.
Ways and Means Committee
Rep. Richard Neal (Mass.), a moderate and generally pro-business Democrat,
is the presumptive chairman, and Kevin Brady (Texas), the current chairman
and one of the principal authors of the Tax Cuts and Jobs Act, is likely to
serve as ranking member. Key issues are likely to be administration
oversight, revisions to the Tax Cuts and Jobs Act, especially the corporate
rate, and efforts to strengthen Obamacare.
Rep. Collin Peterson (Minn.), the current ranking member, and Rep. Mike
Conway (Texas), the current chairman, will trade places becoming chairman
and ranking member respectively.
Small Business Committee
Rep. Nydia Velazquez (N.Y.), the current ranking member, will likely become
chairman. It is unclear who will become ranking member.
U.S. Senate in the 116th Congress
Though Republicans retain control of the Senate and Mitch McConnell is
likely to continue as majority leader, a number of committee chairmanships
will change hands. Below is what we know now.
Sen. Mike Crapo (R-Idaho) has expressed his interest in continuing as
Chairman of the Banking Committee though he may also have an opportunity to
become Chairman of the Finance Committee, ceding the Banking Chair to Sen.
Pat Toomey (R-Pa.), a strong supporter of community banks. Sen. Sherrod
Brown, who was reelected last night, will likely continue as Ranking
With the retirement of Orrin Hatch (R-UT), Sen. Grassley (R-Iowa) or, as
noted above, Sen. Crapo is likely to become chairman. Sen. Ron Wyden
(D-Ore.) is likely to continue as ranking member.
The leadership of this committee is likely to remain unchanged: Sen. Pat
Roberts (Kan.) as chairman and Sen. Debbie Stabenow (Mich.), who was
reelected on Tuesday, as ranking member.
ICBPAC Shows Community Bank Muscle in Historic Midterm Election
In the 2018 cycle, ICBPAC contributed $1.7 million supporting more than 320
federal candidates and committees who understand the challenges community
banks face. Our overall success rate in this cycle was 86 percent. Our goal
is to support our friends especially when they are in tough races, not to
be risk-adverse but to spend resources where they are needed most.
An ongoing goal of ICBPAC is to elect more community bankers to Congress.
ICBPAC is proud to have supported Kevin Hern (R-Okla.),
board member of Firstar Bank, and Van Taylor (R-Texas),
board member of Texas Gulf Bank, both of whom won their first terms in
Congress in open seat races.
We look forward to welcoming all ICBPAC-supported candidates as newly
elected members of the 116th Congress.
Your Continued Involvement Is Needed
As we enter the 116th Congress and seek to defend past
achievements and pursue new opportunities to promote our mission, community
banker involvement and active support in the political process is critical.
For more information on how to get involved, visit ICBA's Advocacy Resource Center.