Executive News: Elections are (almost) over … now fun begins

Well, it’s finally over, the 2024 elections have come and gone and now we must look and see what the future looks like for our industry.

You could argue the 2024 election cycle has been going on for nearly four years, I don’t know if we ever had a break. We’ll get into what we can almost expect to happen in the near future, but lets take a quick minute to look at what happened on Tuesday night.

With all the action on Tuesday night focused on the federal level, there was still plenty to watch right here at home. Four of the five members of the Oklahoma congressional delegation had races with Rep. Lucas winning re-election during the primary race back in June. The other four members all won their races easily: between the four, the average margin of victory was 26%.
There were several races for the state house and state senate but we didn’t see any incumbents defeated or, frankly, any surprises at all. We knew it was going to be quiet at the state level, with all of our excitement will come in 2026 – if you were looking for something to which to look forward!

We could spend hours breaking down the presidential election and what group didn’t perform as expected or what age group out-performed their expectations, but what we know for a fact is Donald Trump will be the 47th president of the United States. With a change in party in the White House, it will most likely mean there will be significant changes for our industry in the next couple of years.

While the majority of the country was simply focused on the presidential race, control of the House and Senate are almost equally as important – especially for banking. Going into election night, the Democrats had control of the senate my the narrowest of margins and the Republicans had a similar advantage in the house. Most of the pre-election crystal balls had Republicans flipping two seats to take control of the Senate while the House looked to be pretty much up for grabs.

As of when this issue of Oklahoma Banker went to press, we know for sure Republicans will have control of the Senate. They currently hold 52 seats while the Democrats hold 43 seats and independents have two seats – both of which will caucus with the Democratic Party. It leaves us with three undecided seats: Pennsylvania, Arizona and Nevada.

In those three, Democrats lead in two and the Republican challenger is leading in Pennsylvania. We hope, by the time you get this newspaper, these races will have been called.

The one race on election night that was the most interesting involved Sen. Sherrod Brown (D-Ohio). Brown has represented Ohio since 2007 and has been chair of the Senate Banking Committee since 2021. Brown ended up losing to Republican Bernie Moreno, and with the change in which party controls the Senate, we assume Sen. Tim Scott (R-S.C.) will be the new chairman in January 2025.

While the Senate is somewhat decided, the U.S. House of Representatives is far from it, at least as we got to press, although election experts say Republicans have a 95% chance of retaining their majority. As of when I wrote this, there are currently 25 races yet to be called and Republicans currently hold 211 seats and Democrats 199. The majority party will need at least 218 members.
Probably one-third of the races that haven’t been called yet are in California. Under California law, they will continue to count votes until Nov. 12 as long as the mailed ballots were postmarked no later than Nov. 5.

Once the elections are over, then the fun starts. We know who the President will be, and we assume Rep. Mike Johnson (R-La.) will still be the speaker of the House. What we don’t know is who will be the Senate majority leader. Sen. Mitch McConnell (R-Ky.) is the current minority leader, but he announced earlier this year he will resign his position at the end of the year. There are four names who are being talked about as the next leader of the Senate: John Thune (R-S.D.), John Cornyn (R-Texas), John Barrasso (R-Wyo.) and Rick Scott (R-Fla.). I don’t have insight as to who might be decided and when – at this point nobody does – but I do know there is a 75% the next leader in the Senate will be named “John.”

Also, for what its worth, Thune is the only one considered a “Trump ally.”

What does all this mean for the banking industry? The obvious answer, and what could arguably be the best thing for banking, is a change of leadership at our regulatory agencies. The first thing that we can expect is the removal of Rohit Chopra from the Consumer Financial Protection Bureau. Trump’s second term is likely to favor bank deregulation while keeping an eye on economic growth.

If you’ll recall, during Trump’s first term, a large part of his agenda was deregulation. On Jan. 30, 2017, just days after taking office, he signed Executive Order 13771 “Reducing Regulation and Controlling Regulatory Costs.” It required any executive department or agency planning to publicly announce a new regulation to propose at least two regulations to be repealed.

The cost of the implementation of these new regulations was supposed to be less than or equal to zero dollars. If costs above zero were accrued, the payments were to be funded by the elimination of more regulations.

Look for President Trump to do something like this executive order early in his presidency.

Over the next couple of months, you are probably going to hear a lot about CRA – not the CRA you are used to hearing about, though. This particular CRA is the Congressional Review Act. The Congressional Review Act is an oversight tool Congress may use to overturn final rules issued by federal agencies. The Congressional Review Act can be used at all time when Congress is in session. It’s rarely used, but when it is, it’s usually during a change in administration and when there is a shift in majority control.

In the summer of 2023, House Joint Resolution 66 was introduced in the House, and the Senate introduced an identical resolution with S.J. Res. 32. Both were brought under the Congressional Review Act to disapprove of the CFPB’s implementation of Section 1071. If approved and signed by the president it would’ve kept Section 1071 from being implemented. Both the House and the Senate passed their respective resolutions with bipartisan support, but President Biden vetoed the resolutions in December 2023 and the rest is history.

I would not be surprised if these specific issues aren’t resurrected in the first couple of months once the new Congress is sworn into place.

These are all just a few examples of what we could see in the coming months and possibly the next two years. Do I feel comfortable saying that the next two years will be more banker-friendly than the last couple? I’d say the answer is “yes.”

Still, there will be speed bumps along the way: just because Republicans control Washington doesn’t mean that it will be smooth sailing for our industry. For example, there are several new senators and representatives who are passionate about crypto and want to move toward a digital currency, among other issues not necessarily in-line with traditional community banking.

The last thing I want to leave with. is regardless of who’s in control and who determines the agenda. it’s still Washington D.C. and anything can happen.

We’ll continue to monitor everything that is happening and we’ll report back to you with any major developments.