Nearly two weeks after the midterm elections have ended, there is finally a clear indication as to which party will be in control of each of the chambers of Congress. While the Senate is staying in the hands of a Democrat majority – supported by two independents that caucus with them – the House of Representatives will see Republicans in the majority for the first time in four years.
This change in control is likely to result in a shift in the tone and perspective of key committee as gavels pass hands to their new Republican chairs.
While there is no way to say officially who will be on the U.S. House Committee on Financial Services until Congress is sworn in for 2023, incumbents who will likely return to the committee have made statements about the housing industry that may shed some light on what its focus will be.
Ranking member Patrick McHenry (R-NC) will be returning to his seat, likely as the committee chairman. In an interview with Politico, he stated he was working on a plan for oversight of the Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission.
On the issue of how financial institutions are handling climate, social issues, and China, his theme on oversight continued with the statement: “There will be significant emphasis on not just oversight of the regulators, but of the regulated and the decisions they’re making.”
In a House hearing on the housing market and home prices earlier this year, McHenry criticized Democrats for what he called “bad policies” and pressuring the government-sponsored enterprises to take riskier loans. He stated there was a “bizarre” lack of accountability “for this economic dumpster fire they’ve unleashed.”
“We need to get serious about creating a sustainable housing finance system that can withstand the pressures of a market downturn,” he stated in the hearing. “We should focus on ways to actually increase the supply of housing and create stable prices. We should restore proper oversight of our housing finance regulators like FHFA and FHA – both of which have somehow gone more than two years without appearing before this committee.”
Alexandria Ocasio-Cortez (D-NY) retained her congressional seat as well. During her previous term, Ocasio-Cortez consistently advocated for housing authorities and for solutions to the affordable housing crisis. She introduced the Green New Deal for Public Housing, the Fair Chance at Housing Act, and the Place to Prosper Act, all geared toward supporting public housing, improving living conditions, and reforming screening processes. She also voted for the Homeowner Assistance Fund to protect homeowners experiencing financial hardship during the pandemic.
Based on her record, it is likely Ocasio-Cortez will continue to support social programs and funds to address the affordable housing crisis in a way aligning with the Biden Harris Administration’s plan.
Reps. Blaine Luetkemeyer (R-Mo.), Rashida Tlaib (D-Mich.), and Ann Wagner (R-Mo.) retained their seats and will likely return to the committee in the coming session.
Luetkemeyer stated the Fifth Circuit’s ruling on the CFPB’s funding structure “confirms what commonsense Americans have known all along: the CFPB’s funding structure is unconstitutional.”
“The Appropriations Clause was put in place by our founders to ensure the American people’s representatives have the proper oversight over federal funding,” he continued. “With this ruling, the bureau will no longer be able to rely on their annual blank check from the Federal Reserve, but rather be subjected to the necessary Congressional supervision and level of transparency the American people expect from a government agency.”
Other statements and releases from Luetkemeyer show a focus on decreasing government spending and increasing the oversight of housing agencies, similar to McHenry’s priorities.
Tlaib’s record shows a focus on housing and promoting homeownership among communities of color. Her record includes supporting the Improving FHA Support for Small Dollar Mortgages Act of 2021, securing billions in funding for the Restoring Communities Left Behind Act, and introducing the Tenant Empowerment Act to strengthen tenant protections provided by the U.S. Department of Housing and Urban Development.
Her statements about accountability in the housing market appear to focus on oversight in a different way: while her Republican counterparts speak about overseeing the agencies, Tlaib has worked to promote the agencies’ oversight of the entities within the housing industry, i.e. banks, appraisal companies, credit reporting agencies and housing developers.
Wagner was the vice ranking member of the Financial Services Committee and will likely replace Jake Auchincloss (D-Mass.) as vice chair.
In the same hearing where McHenry spoke about increasing the oversight of the housing agencies, Wagner also criticized the current administration’s approach, stating government involvement is the cause for increased costs to consumers and homebuyers.
“It seems we are not any closer to bringing down the high cost of housing,” Wagner said. “Over the course of 20 hearings, instead of addressing the lack of production of new housing units, the majority has spread blame on property owners and investors, appraisal firms and the mortgage industry. More [Joe] Biden blame game. Meanwhile, they have spent trillions in taxpayer money that has worsened inflation, crippled supply chain and construction market, and ultimately made housing even less affordable.”
Members of the committee who are not returning to the House include Carolyn Maloney, Ed Perlmutter, Al Lawson, Michael San Nicolas (non-voting member from Guam), Cindy Axne, Lee M. Zeldin, Ted Budd, Trey Hollingsworth, Anthony Gonzalez, and Van Taylor.
Though the Georgia runoff election for its U.S. Senate seat won’t occur until Dec. 6, Democrats, secure in their renewed majority, will likely be emboldened to counter messaging coming from the Republican-controlled House and support President Biden’s agenda – especially when it comes to confirmation of presidential appointments.
The Senate Committee on Banking, Housing, and Urban Affairs is poised to see some changes to its ranks in the new Congress. Most notable for the majority, is the potential of Sen. Raphael Warnock (D-Ga.) losing his seat in the Georgia runoff election to challenger Hershel Walker. Warnock is currently part of the majority on the Senate Banking committee, and, if he doesn’t secure reelection, would need to be replaced.
Though Sen. Sherrod Brown (D-Ohio) is all but guaranteed to maintain his position as chair of the committee, some shifts are likely in the Republican ranks. Two Republicans on the Senate Banking Committee will be retiring at the end of this term, Sens. Thom Tillis (R-N.C.) and Pat Toomey (R-Pa.).
Tillis’ successor, Rep. Ted Budd (R-N.C.), is currently serving on the House Committee on Financial Services. His tenure on the House committee makes it likely that Budd will move effortlessly into Tillis’ seat on the Senate Banking Committee next year.
Budd’s time on the House Financial Services Committee suggests he has two main focuses: supporting fintech and crypto and weakening the CFPB. It was less than a year ago that Budd helped introduce legislation entitled the Repeal CFPB Act, which, as its name suggests, would eliminate the CFPB in its entirety.
This current session also saw Budd show support for fintech and crypto industries. This included an op-ed published in The Washington Times last year in which Budd was critical of federal regulators, including the Federal Reserve and the Securities and Exchange Commission, in the way they are approaching cryptocurrency regulation.
Budd compared regulators to “anti-free market” China. Specifically, Budd was concerned about the push to create a central bank digital currency and what a government-issued and -controlled cryptocurrency would have on the free market.
“The development of crypto is the dawn of a new era in innovation, akin to the development of the internet,” Budd wrote. “Congress and federal regulators embraced the invention of the internet in the 1990s, and it led to a transformed world with new possibilities for free expression and economic prosperity. What would have happened if we followed the Chinese model and banned or regulated tech innovators out of existence just as they began to get off the ground? That is the danger now facing blockchain technology.”
Toomey’s retirement also leaves the position of ranking member – the most senior member of the minority party on the committee – vacant. Sen Tim Scott (R-S.C.) is expected to be named the ranking member of the committee at the start of the new Congress.
Scott has not been vocal in his policy agenda for the committee. He has recently been promoting his “opportunity agenda” which is likely to influence him as ranking member. The cornerstone of this policy platform is the expansion of economic opportunities for all Americans.
Scott’s positions on fintech and crypto are still mostly unknown and it is unclear what role he will take in debate over these topics in the years to come.