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Georgia election results may pave way for stricter regulation

Banking leaders condemn Capitol attack

Bank Automation News EditorsbyBank Automation News Editors
January 7, 2021
in Risk & Security
Reading Time: 3 mins read
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Despite pro-Trump rioters’ efforts Wednesday to disrupt the U.S. Senate’s certification of President-elect Joe Biden’s victory, more Democratic legislation is likely bound for approval, thanks to the blue win in the Georgia runoff election on the same day.

National leaders issue statements condemning yesterday’s attack on the Capitol. Image via Pexels.

Four people are reported dead following the breach of the U.S. Capitol building as Congress met. Still, Congress worked through the night after order was restored and certified President-elect Joe Biden’s win in the early hours of Thursday morning. The attack has prompted resignations within President Donald Trump’s administration, calls to invoke the 25th Amendment to remove Trump from office, and several statements from national leaders denouncing the protesters’ actions.

Party unification across the White House and both houses of Congress will likely reduce friction in the legislative process, resulting in more laws finding their way to the president’s desk, according to Pam Perdue, a regulatory and technology expert and former senior examiner with the Federal Reserve Bank of Kansas City. With the Democrats’ win in both Georgia runoff races Wednesday, they secured a 50/50 partisan split in the Senate, with incoming Vice President Kamala Harris casting any tie-breaking vote.

Early days of platform alignment are typically marked by a “release of pent-up legislative energy around issues that may have been nonstarters in a divided leadership,” Perdue told Bank Innovation. In the near term, yesterday’s events will likely contribute to declining public confidence and economic fallout, she said. “When trusted, time-tested and intentionally designed processes of governance, particularly elections, are criticized and maligned in false and unsubstantiated ways — despite ample evidence and the exercise of due process — public confidence is not easily restored,” she added.

The Biden administration could be more focused on consumer protection and thus more inclined to regulate banking than the Trump administration, experts told BI in September. Also under consideration by the Biden’s administration is the introduction of a public credit reporting agency, a function long dominated by private companies Experian, Equifax and TransUnion. Experts say Democrats are more likely to be skeptical of industrial bank charters, which allow nonbank entities to own banks.

In the short term, a Democrat-controlled Congress could overturn federal agency rules established in recent months with the seldom-used Congressional Review Act (CRA), Brian Knight, director of innovation and governance at the Mercatus Center at George Mason University, told BI.

It’s not yet clear, however, what regulatory actions may come to fruition in the next two weeks, Perdue noted, adding that legislative responses almost always follow crisis points, something anticipated to hold true in this case.

Meanwhile, leaders of some of the biggest banks institutions and trade groups in the country have joined elected officials in condemning Wednesday’s violence at the Capitol.

Jamie Dimon, CEO of the $3.2 trillion JPMorgan Chase called on elected leaders to “call for an end to the violence, accept the results, and, as our democracy has for hundreds of years, support the peaceful transition of power.”

Likewise, Charlie Scharf, CEO of the $1.92 trillion Wells Fargo, released a statement Wednesday urging an immediate end to the violence and for “leaders” to ensure faith in the system and electoral process. Citigroup CEO Michael Corbat took to LinkedIn to say he was “disgusted by the actions of those who stormed the U.S. Capitol.”

American Bankers Association President and CEO Rob Nichols emailed its member bank CEOs overnight, calling Wednesday “a dark day for democracy,” and urged the country’s elected leaders to “immediately condemn today’s mob riot and do everything they can to support the peaceful transfer of power.”

Tags: politicsPremiumregulation
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