What The Midterms Mean For Financial Services
The costliest, and possibly most intense, midterm election concluded Tuesday with a little something for everyone.
Democrats regained control of the House and several states, while Republicans expanded Senate control and won several high-profile races. Here's are three key takeaways for the financial services' industry:
- Tough questioning from House committees. Executives can no longer count on a friendly agenda from House committees. For example, the House Committee on Financial Services' gavel changes hands from Jeb Hensarling, R-Texas, to Maxine Waters, D-Calif.
The committee has primary control over financial regulation and House financial reform. In particular, Waters could exert influence over the Securities and Exchange Commission's best interest regulation. Democrats on the panel are expected to have tough questions for SEC Chairman Jay Clayton when the time comes.
“There will be more oversight and subpoena with committees headed by Democrats,” JPMorgan Chase wrote in a pre-election note.
- New insurance commissioners in California, Kansas, Oklahoma and Georgia. Republicans Vicki Schmidt (Kansas), Jim Beck (Georgia) and Glen Mulready (Oklahoma) all look to have won handily as of this morning.
The California race remains unsettled, with Democrat state Sen. Ricardo Lara leading former insurance commissioner and lifelong Republican Steve Poizner 50.8 to 49.2. Industry analysts forecast reduced regulatory pressure should Poizner recapture the office he held from 2007-11.
Lara, on the other hand, is one of the more liberal members of the California Senate. He co-authored a bill last year to create a state single-payer, universal healthcare plan that would have cost around $400 billion annually. After passing the Senate, it was shelved in the Assembly.
California is one of the one of the most-regulated states under Insurance Commissioner David Jones, who is term-limited, and is likely to remain so if Lara holds on.
- Financial services legislation could pass. Shifting House control to Democrats could be good news for legislation favored by Rep. Richard Neal, D-Mass.
The Family Savings Act includes a host of measures, including eliminating required distributions for retirement accounts totaling less than $50,000; encouraging employers to band together to form retirement plans; and creating tax-advantaged savings accounts that can be tapped immediately rather than waiting for retirement.
The bill would also allow families to make penalty-free retirement plan withdrawals to help pay for childbirth or adoption expenses.
The American Council of Life Insurers promises a full-court press to get the bill through Congress during the current lame-duck session, said Alane Dent, senior vice president of federal relations for ACLI.
“The need for action is clear. More Americans need access to retirement savings plans," she said. "They need lifetime income guarantees like workers received more commonly in the heyday of the defined benefit pension plans. Enhancing the retirement system would help millions of Americans save for retirement and ensure their savings will last a lifetime."
Neal is poised to take over as chair of the House Ways and Means Committee, a powerful panel with control of tax legislation. With his support, the Family Savings Act has a strong chance to pass. The Senate is dealing with different legislation -- the Retirement Enhancement and Savings Act -- so conference committee work would be required to marry the two bills.
"Congress should not miss this once-in-a-generation opportunity to support workers, retirees and business owners by passing comprehensive retirement security legislation this year," Dent said.
This article appeared in InsuranceNewsNet.