Last October, as voting was already underway in the 2018 midterm elections, Republicans in Congress went on the attack against potential incoming Democratic committee chairs. Foremost among the attackers was now-Minority Leader Kevin McCarthy, R-Calif. Foremost among the attacked was now-House Financial Services Chairwoman Rep. Maxine Waters, D-Calif., whom McCarthy singled out as a troublemaker on Fox News that same month.
Maybe McCarthy was trying to motivate less-likely-to-vote backers of President Trump who had a particular disdain for Waters and prevent them from sending a Democratic majority to Congress via inaction. Just as likely, he was trying to gin up fears in the financial sector of a Waters takeover, potentially to spur extra donations from that sector to Republicans. But in any event, the effort failed, and now with Waters firmly installed, one possible reason is becoming clear: It turns out that the financial services sector, writ large, just isn’t as terrified of Waters as you might expect.
This is despite headlines like “Maxine Waters takes the reins of a powerful House committee. Wall Street is nervous” from the Washington Post. Undoubtedly, whenever a new leader takes over, especially one from a party more associated with regulation and skeptical oversight of an industry, there will be “nervousness.” But broadly, ask around financial services trade associations and companies with a D.C. presence, and the message is that at least thus far, they have a good working relationship with Waters and her staff, who are perceived to be open to hearing them out on a variety of issues and not hostile. This was my finding in talking to an array of individuals advocating on behalf of different companies and industries within the financial services sector as a whole. The question is will it remain like this, and if so, for how long?
On the one hand, Waters not being big-and-scary to everyone in the world of finance shouldn’t be a surprise. She has personal ties to the banking sector via her husband’s ownership stake in, and former directorship of, One United Bank, an African-American-owned and managed company that is certified as a Community Development Financial Institution and registered with the Federal Deposit Insurance Corporation. It is also incredibly early in her tenure, and even the most incitement-happy partisans generally don’t want to send their potential foes to the proverbial barricades this early on in a new Congress.
Waters’ main areas of interest might not be hammering financial institutions per se, but protecting the principles behind Community Reinvestment Act, which critics say spurred the 2008 financial crisis but defenders like Waters see as a tool in preventing discriminatory lending practices in finance, and combating homelessness — a major focus of that “Wall Street is nervous” Washington Post piece.
But on the other hand, there are financial services firms that should be nervous. Wells Fargo and Equifax are two — a lot of consumers are still mad at both a dodgy account-creation-scheme and a huge data breach, respectively. While neither wants more congressional scrutiny, it’s hard to believe Waters would pay a political price for targeting them.
Another is Deutsche Bank, which reportedly had a significant creditor-debtor relationship with President Trump, has been decried by “Never Trumpers” for “laundering billions in Russian money,” and which Waters has called “one of the biggest money laundering banks in the world” and pledged to scrutinize. Of course, if any financial institution screws up the way Wells Fargo or Equifax did, they can probably expect to be testifying in front of Waters. At a minimum, it’s the 21st-century equivalent of putting on a public “lock them in the stocks and pelt them with rotten tomatoes” show for angry consumers.
But thus far, Waters is looking like she could be several steps removed from what Republicans warned ahead of Election Day. She will likely be no friend to the financial sector. But she might not be its literal worst enemy either.
Liz Mair is founder, owner, and president of strategic communication firm Mair Strategies LLC, which works on various financial services issues. She is also a recovering debt finance and banking lawyer.
