Consequential Election for Credit

Consequential Election for Credit?

While votes are still being tabulated in some House of Representatives races, both the Senate and the Presidential election have been called for Republicans. President-elect Donald Trump won both the Electoral College and the popular vote. News outlets are predicting the House will likely remain in the GOP's hands.

Sen. Tim Scott (R-SC) is likely to chair the Senate Banking Committee. While Sen. Elizabeth Warren could be the Ranking Member. The looming retirement of House Financial Services Chair Patrick McHenry (R-NC) has triggered a four-way race for the top GOP slot on the House Financial Services Committee. Reps. Andy Barr of Kentucky, French Hill of Arkansas, Bill Huizenga of Michigan and Frank Lucas of Oklahoma are vying to replace the North Carolina Republican.

With the start of a fresh administration and new Congressional session, there is optimism that an industry's agenda will be given priority, particularly one so important to American consumers and our national economy. So, if there is a Republican sweep, what does it mean for financial services and consumer credit?

First, let's consider what Congress could do. There have been several bills introduced in both chambers that would make various changes at the Consumer Financial Protection Bureau (CFPB). For example, there are bills that would undo the Bureau's small business lending and nonbank registry rules. There is a bill that would require the Bureau to publish a justification of the proposed rulemaking, a quantitative and qualitative assessment of all anticipated direct and indirect costs and benefits. There are bills that would establish new offices, for economic analysis and an inspector general. There is legislation that would change the Bureau's unfair, deceptive, and abusive acts or practices authority. And of course, there is a bill that would change the structure, funding, and rulemaking procedures of the CFPB.

AFSA has advocated many of these proposals, which would bring greater accountability and transparency to the Bureau, while ensuring consumers are protected, and that industry players have some certainty in both the rules of the road and how those rules are proposed and implemented.

Keeping that in mind, what isn't likely to unfold in 2025-26? The repeal of the Consumer Financial Protection Act of 2010, which established the CFPB. Why, given that there was a focus during the presidential campaign on proposals that would shrink the size of the federal administrative state? The vote margins for Republicans would be very narrow, and even if they weren't, the evolving populist streak in the GOP, along with the fact that most legislators don't want to remove an agency with the words "consumer" and "protection" in the name, makes such a move improbable.

The long list of the incoming administration's priorities, along with the tight margins, mean that wholesale reforms passing quickly are doubtful, but AFSA will continue to work with policymakers on legislative and policy proposals that will benefit consumers and financial institutions who serve them. And we'll continue to keep you updated as President-elect Trump's transition team moves into high gear.

November 7th, 2024