How Election Results Will Impact ARM Industry

Democrats last night wrested control of the House of Representatives for the first time in seven years last night, while Republicans made gains in the Senate, setting up a legislative showdown that will last for at least the next two years.

That one party each maintains a majority in the House and Senate is perhaps emblematic of the political polarization that has gripped the country for the past two years.

A change in control means that Democrats will regain control of not just the House of Representatives, but each of the House’s committees, including the House Financial Services Committee, for example. Rep. Maxine Waters [D-Calif.], the ranking member on the House Financial Services Committee is poised to become the committee’s next chairman, replacing Rep. Jeb Hensarling [R-Texas], who did not seek re-election.

Rep. Waters has been a staunch advocate of the enforcement and supervisory activities of the Bureau of Consumer Financial Protection, and was a big supporter of Richard Cordray, the former director of the agency — who lost his bid to become the next governor of Ohio last night. Consumer protection has been a key focus for Rep. Waters through the years.

But while Rep. Waters does not have much love for the new regime atop the BCFP, it is the Senate’s job to advise and consent the president’s choices to lead federal agencies, including the nomination of Kathy Kraninger to be the BCFP’s next director. Republicans picked up two seats in the Senate, giving them a current total of 51, compared with 43 for the Democrats. Independents control two seats, and as of Wednesday morning, four races had yet to be called. Kraninger’s nomination is awaiting a vote before the full Senate. If she is not confirmed before the current Congressional session ends, she would need to be re-nominated by President Trump and go through the confirmation process again, while Mick Mulvaney would be allowed to remain as the BCFP’s acting director.

The swing for Republicans in the Senate was being attributed to how Democrats handled the Supreme Court nomination of Brett Kavanaugh, according to published reports. Coincidentally enough, Kavanaugh, who was confirmed to the Supreme Court, is not a fan of the BCFP and the broad regulatory powers it possesses.

Where the election results will likely have the most impact on the ARM industry is at the state level. Democrats won gubernatorial races in Kansas, Michigan, Illinois, Wisconsin, Maine, and New Mexico, while Republicans won races in the battleground states of Florida and Ohio. Industry experts have warned that states are taking more of an interest in consumer protection issues, including areas related to debt collection.