|
Yesterday’s midterms put Democrats in charge of asking the questions in Washington in 2027. The agencies under President Trump will continue to deregulate regardless of the blue wave. Starting in January, companies in Democrats’ sights should expect pressure from Capitol Hill in the form of letters, hearings, subpoenas, investigations, and the headlines that follow them. What happened on TuesdayTwo years after giving Republicans a mandate, voters sharply changed course and gave Democrats both chambers of Congress. Democrats flipped Senate seats in Texas, Ohio, Kansas, Iowa, North Carolina, South Carolina, and Maine. The biggest shock came in Texas, where voters ousted Gov. Greg Abbott, the architect of “Y’all Street,” and elected Gina Hinojosa, who campaigned against “undue corporate and billionaire influence.” Winners tend to treat a result like this as proof that voters wanted exactly what they campaigned on, whether or not that’s true, and will likely spend 2027 trying to deliver it. Who will be asking the questionsSenate Banking Elizabeth Warren (D-MA) is ranking member and will likely chair. Expect letters and CEO grillings on crypto ethics, private credit, and mergers. Sherrod Brown (D-OH) returns after crypto groups spent more than $64 million against him. A former chair, he’s a populist focused on Wall Street accountability and skeptical of crypto. House Financial Services Potential Chairs Maxine Waters (D-CA), 88, is ranking member. Combative and willing to use subpoenas. Sean Casten (D-IL), 54, is a declared challenger focused on climate risk. Bill Foster (D-IL), 71, is weighing a bid, with a focus on AI and financial stability. Government shutdown comingDecember 11. Government funding runs out. Republicans want a long bill, Democrats want a short one, and the President holds the veto. |
What to watch in 2027Hearings. There is no winning a hearing. There is only losing, and the companies that fare best are the ones that prepared long before the invitation arrived. Expect to see many high-profile hearings, and for large companies, it’s a battle over who gets eaten last. Credit cards. Both parties and the White House are generally aligned and could compromise on swipe fees and perhaps even a 10% cap on card interest. Rule-focused agencies. New CFPB enforcement cases are down about 97% and SEC enforcement actions are down 22%. Expect a wave of financial services rulemaking in the first quarter, with lawsuits and hearings to follow. Banking. Capital rules are loosening and bank mergers rose 46% last year. The new fight is debanking, an issue that can cross party lines. The states. State attorneys general are now the busiest financial regulators in America, and the Manhattan District Attorney launched a corporate crime and antitrust task force on October 14. |
The takeawayYes, deregulation continues. But the next two years will be noisy, wild, and weird. The regulators are friendly to financial services. Congress is about to get loud, and a lame-duck president could struggle to keep his own party in line. The right next step depends on your brand. Where it applies, we recommend three things.
|
