Sen. Richard Shelby (R-Ala.) is entering his final months as chairman of the Banking Committee — and the financial services industry is eager to see him go.
Shelby is expected to easily win reelection in November but won’t be allowed to keep the Banking gavel in the next Congress due to Republican term limit rules.
{mosads}That’s welcome news for Democrats and financial services lobbyists. They say Shelby has failed to move important legislation and nominations out of committee, ignored several potential bipartisan deals and failed to prioritize policy and oversight issues.
“The Richard Shelby chairmanship has been a huge disappointment not only to the financial services community, but the businesses community and the larger consumer community,” said one senior financial services lobbyist who requested anonymity to speak freely.
A spokeswoman for Shelby countered that Democratic obstruction has jammed up the committee and said the chairman has “championed prudent legislation to strengthen our financial system.”
“In the coming months, we will continue to try to work with ranking member [Sherrod] Brown in hopes of finding areas of common ground where we can move forward together,” said Torrie Matous.
Brown’s spokeswoman, Jennifer Donahue, said the top Democrat “does not support plans to put our economy in jeopardy by going back to the days when hardworking American taxpayers were left on the hook for Wall Street greed.”
“He is proud of the work Congress did last year to provide relief to credit unions and community banks, proving that meaningful action is possible when both sides work together,” said Donahue, “and he is eager to work with his colleagues on continued efforts to move Banking Committee nominees through the Senate and to find areas of common ground with Republicans.”
Shelby served his first term as chairman of the Banking Committee from 2003 to 2007 and regained the gavel in 2015 when Republicans won back the Senate.
The committee would likely be led in the next Congress by Sen. Mike Crapo (R-Idaho) if Republicans hold the majority, while the gavel would likely fall to Brown (D-Ohio) if Democrats take control.
Financial services advocates had high hopes for Shelby’s return, expecting that he would bring a deliberate approach and shift the committee’s focus to easing regulations.
“[We] were very excited for the Shelby chairmanship,” the lobbyist said, calling the Republican a “deal-maker” with a willingness to work across the aisle. “That Richard Shelby just hasn’t shown up.”
Shelby’s 20 months as chairman have seen little action on legislation and nominations.
The Alabama Republican earlier this year refused to schedule a vote on more than a dozen nominees, including board members for the Securities and Exchange Commission and a new leader for the Treasury Department’s anti-terrorism efforts.
Shelby said he wouldn’t vote on any nominees until after his primary was over, and he stuck to his word. The Banking Committee cleared it first nominee on March 10, two days after the chairman won his race. Since then, the committee has approved seven of the 16 nominees under its jurisdiction.
Democrats on the Banking Committee had protested against Shelby’s inaction through open letters and press statements. The panel cleared 26 of the 30 nominees in the previous two-year span under then-Chairman Tim Johnson (D-S.D.).
“Nominations have been incredibly slow — if almost non-existent in terms of the committee,” said panel member Sen. Bob Menendez (D-N.J.), “and it’s a shame because some of those are very critical to economic and national security interests.”
Matous called the nomination process an important tool for holding the administration accountable, highlighting a battle over filling out the Federal Reserve Board.
“Chairman Shelby has made it clear that he will utilize this power and not hold a hearing on the two nominations for Members of the Federal Reserve Board of Governors until the President fulfills his duty under the law and nominates a Vice Chairman for Supervision,” Matous said.
While industry sources resent the nomination logjam, they are far more upset about the lack of action on what they consider meaningful legislation.
Since 2015, only one bill to start in the Banking Committee made it to the Senate floor: a measure to award the Congressional Gold Medal to civil rights protesters who marched from Selma to Montgomery, Ala., in 1965. The House version of that bill was signed into law.
Four bills to start in the Banking Committee were cleared between 2013 and 2014: two addressing federal housing financing, one to reauthorize terrorism risk insurance, and one regarding registered agents and brokers. But only one of those bills made it to President Obama’s desk, and it was vetoed.
When Shelby took the gavel, industry sources expected a push to ease financial regulations.
The senator introduced the Financial Regulatory Improvement Act in June 2015, a sweeping bill that would roll back the regulatory work of the Treasury Department, the Federal Reserve, the Consumer Financial Protection Bureau and beyond. The bill was given a hearing in July 2015 but has not seen action since.
A senior industry source said he appreciated the bill but questioned Shelby’s desire to work with Democrats on a version that could become law.
“With any bill, there is a period where you decide, ‘I am not going to get all I want and I will get what I can,’ ” the source said. “This legislation never reached that point, and it reflects on the efforts of the sponsor.”
Industry representatives are frustrated with the lack of action on reversing their most hated aspects of the Dodd-Frank financial reform law, including the structure of the Consumer Financial Protection Bureau and the new “systemically important” regulatory designation for major financial institutions.
“Republicans and Democrats alike are disappointed not only that nothing has moved, but the ways things have moved,” said the lobbyist. “They’ve had essentially one big markup of the regulatory relief bill, and that’s it.”
Despite the lack of major legislative action, industry members offered some praise for Shelby.
Paul Merski, executive vice president for congressional relations and chief economist for the Independent Community Bankers of America, commended the senator’s previous work on increasing federal deposit insurance levels.
And the senior lobbyist praised Shelby for not clearing any legislation that would be harmful to the industry.
“We’d rather have a Banking Committee that’s essentially dormant than one that’s going to cripple the economy by passing new laws and regulations,” said the lobbyist.