Banks brace for tighter oversight from US Congress after Democrats sweep
XLF•Banks expect heightened congressional scrutiny after Democrats take control of both houses of Congress in January, including possible investigations into consumer finance practices and hearings for bank chiefs. They also see an opportunity to press lawmakers to make technology companies do more to combat AI-driven financial fraud.
1. Banks prepare for scrutiny
Wall Street banks are preparing for more investigations and staff inquiries as Democrats take control of both houses of Congress in January, with subpoena power and investigative staffs. Attorneys and analysts expect lawmakers to examine issues including junk fees, predatory lending, mortgages and whether reduced oversight has harmed customers or weakened lenders.
2. Potential policy changes
Senator Elizabeth Warren is seen as the frontrunner to chair the Senate Banking Committee, while Representative Maxine Waters is the lead contender to chair the House Financial Services Committee. Analysts expect bank CEOs may be called to testify again, and flagged possible credit-card interest rate caps as a policy risk.
3. Fraud policy opportunity
Banks are also seeking bipartisan support for measures requiring technology and social media companies to do more to curb financial fraud linked to AI. Huntington Bancshares CEO Stephen Steinour said companies should exclude accounts linked to fraudsters; banks may also seek a review of wire-transfer regulations.
