A New Broom? Not Exactly: A Democratic Congress Will Bring Change, but Not as Much as Bankers Might Think. Two D.C. Veterans Assess the Prospects as the Gavel Is Poised to Open the 110th Congress

Article excerpt

The midterm election. Remember that? It was eight weeks ago and the nations' and media's political attention has already shifted--like moths to a brighter light--to the 2008 presidential stakes.

But ABA's Washington team hasn't forgotten. Nor has it lost sight of the fact that the fortunes of banks more frequently hinge on what happens on Capitol Hill, in regulators' offices, and in state legislatures, than on who sits in the White House.

By that measure, the Democratic sweep of the Hill, bringing with it the rise of Sen. Christopher Dodd of Connecticut and Rep. Barney Frank of Massachusetts to the respective banking committee chairmanships might seem to be like the shifting of tectonic plates--bringing deep, fundamental change to the landscape.

That would be overstating it. Change, yes, of course, especially on certain issues. But overall, the effect on financial services of the election results, stunning as they were, is more a matter of shading, than stark contrast.

And although it's widely assumed that most bankers are Republicans, the ABA has always worked both sides of the aisle, partly because its lobbyists know things can change, but also because banking issues are largely nonpartisan.

"I don't know where the partisan divide is on deposit insurance," says Wayne Abernathy, ABA's head of financial institutions policy and regulatory affairs. "There may be slight tendencies one way or another, but the fines aren't sharp."

Or as ABA's chief legislative lobbyist, Floyd Stoner, observes, ABA has seen some odd alliances in the past on certain issues. In the banks' battles with credit unions, Realtors, and the Farm Credit System, he says, "there are Democrats and Republicans on both sides of the conflict."

That's not to say that November's contest didn't have any impact on the industry, however. When votes are close and the issues are crucial, shading can loom large.

To assess the new brushwork laid on the political canvas by voters, ABA Banking Journal Editor-in-Chief Bill Streeter and Executive Editor Steve Cocheo interviewed Stoner and Abernathy. The two men head up the association's government relations effort, and report to ABA CEO Edward Yingling.

Stoner is executive director, congressional relations and public policy. He spent six years in the House of Representatives working for Representatives Dave Obey and Tim Penny, before joining ABA in 1985.

Abernathy joined the staff of the Senate Banking Committee in 1981, and served in various posts there, including senior legislative aide to Sen. Phil Gramm of Texas, and staff director of the full committee, before moving to the Treasury Department as assistant secretary for financial institutions in late 2002. He joined ABA in 2005, where his current title is executive director, financial institutions policy and regulatory affairs.

Election Impact

Not only did the elections change the makeup of the key banking committees, so did retirements. Maryland's Sen. Paul Sarbanes, the ranking member of the Senate Banking Committee, left at the end of the year, as did House Financial Services Committee Chairman Mike Oxley of Ohio. In addition, three Republican members of the House committee were defeated: Representatives Sue Kelly (N.Y.), Jim Ryun (Kan.), and former chairman, Jim Leach (Iowa). On the Senate side, Republican Sen. Rick Santorum, a banking committee member, was defeated, and Democrat Jim Corzine left the committee earlier last year to become governor of New Jersey.

Also notable is the narrow margin of control that the Democrats hold in both houses, which will be a moderating impact on what the majority can expect to pass, particularly in the Senate, where the Democrats have a one-vote majority (subject to the December development described below). And that vote depends on Senator Joe Lieberman of Connecticut, now an independent, voting with his former party; ABA believes he will, on most domestic issues. …