The turnover of power in the House of Representatives will also have a dramatic effect on the Financial Services Committee.
Thirteen Democrats on the panel, including Pennsylvania's Paul Kanjorski, are leaving the committee because of electoral defeat or retirement. A still-to-be-decided number will also leave due to reassignment to other committees or the reduction of committee seats allocated for their party. Three Republicans are also leaving Congress, and potential subcommittee chairman Jeb Hensarling of Texas is likely to exit the panel since he appears destined to become chairman of the House Republican Conference. Re-elected Republicans also might move to new committees.
"It will be a very different committee next year," Michael Borden, the committee's senior Republican counsel, told a gathering of bank lawyers Nov. 5. He estimated that as many as half of the current 71 committee members could be replaced.
A battle among Republicans is under way to chair the panel. California Republican Ed Royce announced Nov. 3 that he will challenge Alabama's Spencer Bachus for the chairmanship. Bachus is the senior Republican on the committee but drew the ire of his party for working with Democrats to craft legislation enabling the 2008 Troubled Asset Relief Program. He also compared poorly to House Financial Services Committee Chairman Barney Frank, D-Mass., in last year's debate over financial reform.
Royce, on the other hand, made a strong showing, articulating Republican ideas during last summer's debate over financial reform legislation. Royce emphasized the differences in style when he announced his challenge to Bachus. "This is a critical time for our capital markets and our economy," Royce said in a statement. He noted that one of the committee's main jobs this year will be to oversee implementation of the Dodd-Frank financial reform law. "Passage of the Dodd-Frank bill fundamentally altered the structure of the U.S. financial services sector. As the Financial Services Committee addresses the implications for taxpayers and our capital markets, there is no question that now is the time for a determined and effective Financial Services Committee chairman."
William Donovan, a partner in the financial regulation and government affairs practices at Venable LLP, predicts that GOP leaders will stick with tradition. "I expect to see Spencer Bachus take the gavel come January," Donovan says. "He's certainly paid his dues as ranking member." Donovan says Bachus did a commendable job as chairman of the financial services panel's subcommittee on oversight and investigations when Republicans last controlled the House before the 2006 election.
Frank will at least begin the new Congress as leader of the panel's Democrats. For how long remains the question: Several Washington insiders have predicted he would leave the House to take a post in the Obama administration if his party lost control of the House. Staying put would be good news for the panel's Democrats because long-serving colleague Kanjorski, the committee's second-ranking Democrat, lost his race. Without Frank or Kanjorski, Californian Maxine Waters, who is scheduled to go on trial Nov. 29 before the House Ethics Committee, would be next in line to be the ranking member. But she also might face a challenge from New York's Carolyn Maloney if Frank leaves.
Donovan says he considers talk of Frank's exit from Congress nonsense because lawmakers will be writing legislation to address problems with housing finance, one of Frank's primary
interests. "I presume Frank will serve as ranking member for the duration of the [upcoming] 112th Congress," he says.
Subcommittee chairman assignments are expected for Scott Garrett of New Jersey and for Hensarling if he doesn't become chairman of the Republican Conference.
In the Senate, where Republicans gained six seats, Banking Committee Chairman Christopher Dodd is retiring. He is expected to be replaced atop the committee by Sen. Tim Johnson, D-S.D. Johnson, however, continues to suffer some impairment from a 2006 brain hemorrhage, and some industry lobbyists say Rhode Island Democrat Jack Reed may gain some responsibility for running the committee. All signs are that his colleagues believe Johnson is physically up to the job and will hand him the gavel.