With the seating of the 116th Congress, Rep. Maxine Waters (D-Calif.) has taken control of the House Financial Services Committee, the House committee tasked with supervision of the banking industry and the Federal Reserve Board.
This is an enormously important role. As we surveyed tech- and financial services-related trade and business associations this week, one noted: “I can look into that policy inquiry for you. We are of course always looking to expand our relationships on Capitol Hill, and with the new majority in the House taking the reins, Rep. Waters will be very influential.”
Despite claims by right-wing media outlets (and GOP fundraisers), Waters is no wild-eyed radical. She is a competent, deliberative legislator who has been on the Financial Services Committee since 1991. I doubt a true “radical” would have lasted that long.
She has served as ranking member or chair of every subcommittee under its jurisdiction since 1995. This gives her detailed procedural knowledge, perhaps more than any current member. Besides, the House, and even more so, the Senate, are not built for rapid, radical change. They are incrementalist bodies, and Waters fits in well to this model.
Waters does not serve on the House Financial Services Committee alone. Several longtime members of the Congressional Black Caucus also serve with her. These include Reps. Al Green, (Texas), Lacy Clay, (Mo.), ranking member of the Subcommittee on Domestic Monetary Policy and Technology, and Emanuel Cleaver (Mo.). These form an important group of supporters and allies.
So what might we expect?
Wells Fargo — While she, in 2017, suggested the bank be shut down, we do not expect her to propose, as chair, any legislation to do so. After all, Wells Fargo is not only based in her home state of California, but many of her former staffers work for the organization.
She will advocate for more regulatory oversight. We expect her to call all of the banking and securities regulators with any oversight or supervisory responsibility for Wells Fargo (the Federal Deposit Insurance Corp., the FRB and the Securities and Exchange Commission) before her committee. More disruptive, direct action, such as replacing the entire board of directors, is still highly unlikely.
BankBlack — Given the impact of the BankBlack movement, we expect to see a renewed focus on preserving black banks. The number of African-American-owned banks had fallen from 55 in 1994 to 34 by 2010. In 2019, there are just 21. As we forecast in 2011, we expect the number of black-owned banks to fall to fewer than 10 by 2020. Waters may call for a renewed focus on saving and promoting these institutions.
Diversity in the financial services industry — On Jan. 3, the House passed a rules package creating a new Office of Diversity and Inclusion and requiring the appointment of a chief diversity officer. These efforts were due, in no small part, to Waters. This gives us insight into her potential action on the committee.
We expect her to call for renewed attention to the 29 Offices of Minority and Women Inclusion, created in a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act she wrote. The section contains a “provision creating an Office of Minority and Women Inclusion at various agencies to monitor the diversity efforts of the agencies, the regulated entities and agency contractors.”
The Department of the Treasury, the FDIC, the Federal Housing Finance Agency, each of the Federal Reserve Banks, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, the Office of the Comptroller of the Currency, the SEC and the Consumer Financial Protection Bureau all have “an Office of Minority and Women Inclusion … responsible for all agency matters relating to diversity in management, employment and business activities.”
#MeToo — We expect Waters to use the OMWI offices to shine a spotlight on gender pay disparities in federal agencies and in the financial services industry. The fact that Nancy Pelosi is Speaker supports this renewed focus.
Black Lives Matter — The movement may find it has another high-profile champion. I could see Waters calling in the chief financial officer of the National Football League to discuss the league’s banking, financial and labor practices in light of Colin Kaepernick.
Bottom line: Given the full scope of the committee’s activities and jurisdiction, these areas should be considered minor. While we expect a change in focus, we do not expect major upheaval.
William Michael Cunningham is an economist and impact investing specialist at Creative Investment Research in Washington, D.C.
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