House lawmakers used the last oversight hearing with Trump-appointed financial regulators Thursday to signal how they’ll approach working with President-elect Joe Biden’s nominees.
Pointing to voter referenda in Nebraska and Florida that, respectively, imposed a 36 percent annual interest rate cap on payday loans and put the state on course for a $15-per-hour minimum wage in 2026, House Financial Services Chairwoman Maxine Waters, D-Calif., said the election provided Democrats a mandate to pursue progressive financial policies.
Ranking member Patrick T. McHenry, R-N.C., disagreed with that interpretation, noting that Republicans gained seats in the House. Fourteen House seats remain uncalled, but Republicans have at this point a net gain of six seats.
“Pro-growth regulations and policies are the key to success,” McHenry said, urging the committee to focus on bipartisan initiatives. “We know that rightsizing and modernizing regulations is the key to allowing the economy to flourish.”
McHenry praised regulatory actions by the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corporation and National Credit Union Administration during the coronavirus pandemic to encourage lending and a temporary slowdown in credit repayments.
Waters took aim at many of the recent regulatory changes made under Trump appointees, saying she would work with the Biden administration to reverse the OCC’s new rules that critics say would ease banks’ obligation to invest in poor communities. She also said regulators have weakened Volcker rule restrictions on big banks’ proprietary trading and capital rules and stress tests and pledged to work with the Biden administration to reverse them.
Waters also urged the incoming administration to nominate women and minorities to prominent agency positions. “Under Biden’s leadership, our financial regulators will, and must, be diverse,” she said.
If the Biden administration follows Waters’ lead, regulators would reimpose some regulations aimed at ensuring the stability of the financial system as a whole. Republicans complained that those rules, like higher capital requirements for financial institutions, would restrict how much banks and credit unions can lend and act like an anchor on the economic recovery.
Despite the huge economic downturn caused by the pandemic, the regulators said that the financial system remained stable. “We entered the pandemic with banks very well capitalized,” said FDIC Chairwoman Jelena McWilliams, noting that bank failures in 2020 have been on par with prior years.