Although the presidential race matters the most for Wall Street, bankers, financiers and critics of the industry will be watching several other key elections Tuesday that could have significance for finance and banking.
Although he has run against bankers and Wall Street, Donald Trump has said that he would repeal President Obama’s Wall Street reform law, while Clinton has promised to tighten financial regulations and nominate tough regulators.
But whoever is president, the following elections also will influence the course of financial policy:
Pennsylvania Senate
If he’s re-elected, Republican Sen. Pat Toomey would play a major role in shaping economic policy in the next administration as a member of the Senate Finance Committee as well as the Banking Committee, where he is currently the chairman of the financial institutions and consumer protection subcommittee.
Toomey is a fiscal conservative with ties to the financial industry: He began his career at banks, namely Chemical Bank and the investment bank Morgan, Grenfell & Co.
Those ties have led to Democrats portraying him as a stooge of Wall Street in his re-election race against Democrat Katie McGinty, the most expensive race of the cycle in terms of outside spending.
Toomey’s record is one that indicates skepticism of government regulation and strong support for fiscal conservatism.
While a member of the House, Toomey helped write the bill that repealed the Glass-Steagall separation of commercial and investment banking, legislation signed by President Bill Clinton that liberals have called for reversing and sometimes blamed for causing the financial crisis.
More recently, Toomey has pushed Federal Reserve Chairwoman Janet Yellen to raise interest rates, making the case more forcefully than other members of Congress when Yellen makes the rounds on Capitol Hill. He has backed legislation to add a special provision to the bankruptcy code for banks, making it easier for megabanks to fail through the bankruptcy process rather than through the government-led process created by the 2010 Dodd-Frank financial reform law. That bankruptcy plan is likely to figure prominently in any conservative reform of financial regulation. Toomey has also been a supporter of investors in the bailed-out government-sponsored enterprises Fannie Mae and Freddie Mac in their efforts to prevent the government from taking all of the companies’ profits.
Indiana Senate
In the age of Elizabeth Warren and Bernie Sanders, the Senate Democratic caucus would become significantly more friendly to Wall Street if Evan Bayh is elected to Indiana’s open Senate seat.
Bayh, who served in the Senate from 1999 to 2011, has a track record of votes helpful to the financial industry and has worked in finance in the meantime, a combination that has created image problems for him in Indiana.
He is a board member for Fifth Third Bank and worked for private equity firm Apollo Global Management, in addition to working for the U.S. Chamber of Commerce and elsewhere in lobbying.
As a senator, Bayh sided with finance at key junctures, such as helping to kill a tax on private equity compensation in 2010. In his race against Republican Rep. Todd Young, Bayh has come under fire for interviewing with financial firms for jobs while in office and for lunching with financial firm lobbyists on the day that he cast a vote for the bank bailout known as TARP.
His election would have special impact because he had relative seniority on the Senate Banking Committee, leading some to speculate that he might be in line to helm it if he was elected. Currently, Ohio Sen. Sherrod Brown, a staunch critic of Wall Street, is the panel’s top Democrat.
While Bayh likely wouldn’t leapfrog Brown, he would tilt the panel in a more moderate direction. Representation of moderate Democrats on the committee is already a source of frustration for some liberals, as it currently features four of the nine most moderate Senate Democrats, according to ProgressivePunch.org lifetime scores: Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia.
Bayh started out with a huge advantage over the relatively little-known Young, but he has seen his lead evaporate down the stretch. The RealClearPolitics poll average lists the race as a tossup.
Wisconsin Senate
Wisconsin’s Senate race would have the opposite effect: If Russ Feingold succeeds in unseating Republican Ron Johnson, the Senate Democratic caucus would be pulled to the left.
Feingold, who lost to Johnson in the Tea Party wave of 2010, would be a top skeptic of Wall Street practices in Congress if voters bring him back.
When Congress debated Dodd-Frank in 2010, he was the only Democrat to vote against it on the grounds that it didn’t go far enough in regulating big banks. He did, however, vote in favor of a failed amendment that would have capped banks’ size.
Feingold likely would be an ally to Warren and a member of the small group of Senate liberals willing to take on the president over Wall Street issues, whether that president is Trump or Clinton.
Warren has traveled to Wisconsin several times to campaign with Feingold and recently told supporters in a fundraising email that he would “fight side-by-side with a growing progressives caucus, side-by-side with Bernie Sanders and Al Franken and Sherrod Brown and Jeff Merkley and Tammy Baldwin.”
New Jersey’s Fifth District
New Jersey’s Fifth District race is one of the interesting subplots of the 2016 election.
Running for re-election is Republican Rep. Scott Garrett, who, unusually for a member of the New Jersey delegation, is one of the most conservative members of the House.
He is also the chairman of the capital markets and government sponsored enterprises subcommittee, a powerful post that has oversight of the Securities and Exchange Commission and Fannie and Freddie that is known for commanding strong fundraising from the finance sector.
No one is more tenacious grilling regulators during oversight hearings or advancing regulatory relief bills than Garrett.
His support from the industry has faltered because of his strong social conservatism, however. Earlier this year, Bloomberg Businessweek called him “Wall Street’s bigot in Washington” in a headline for what the magazine called his “anti-gay sentiment,” reporting that some lobbyists were considering opposing him for his views.
Outside groups have spent $4.5 million trying to defeat Garrett, and his opponent, moderate Democrat Josh Gottheimer, has outraised him.
But social issues are not the only factor working against Garrett. The National Association of Realtors has spent $1.8 million to boost his opponent, reflecting Garrett’s support for shuttering Fannie and Freddie and paring back government guarantees for mortgage-backed securities. While that’s a stance in line with conservative thinking, it’s one that conflicts with the priorities of the housing and banking industries.
