# Analysis-U.S. regulators could be pressured by slim Republican House control
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-18
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Republicans' New Power: Curbing Biden's Business
Meta Description: With control of the House, Republicans aim to rein in Biden's regulatory initiatives, arguing agencies overstep authority. Stay informed with Reuters.
URL: https://financedigest.com/analysis-u-s-regulators-could-be-pressured-by-slim-republican-house-controlhtml

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By Ross Kerber and Chris Prentice

BOSTON/ WASHINGTON (Reuters) – With the U.S. House of Representatives under their control, Republicans have a new pulpit to try to constrain President Joe Biden’s administrative oversight of [business issues from consumer finance to climate rules](https://www.financedigest.com/uk-businesses-call-for-looser-immigration-rules-to-boost-growth.html "UK businesses call for looser immigration rules to boost growth").

Policy analysts said Wednesday’s projected win in the midterm elections will embolden Republicans who have alleged the Securities and Exchange Commission (SEC) and [Consumer Financial](https://www.financedigest.com/uk-consumer-mood-hits-one-year-high-but-financial-gloom-persists.html "UK consumer mood hits one-year high, but financial gloom persists") Protection Bureau (CFPB) have overstepped their authority under Democratic leadership.

Republicans argue the agencies have written rules outside of the legal process and taken a hostile approach to industries they regulate, while Democrats [say they are only fulfilling their mandate to protect investors](https://www.financedigest.com/virgin-orbit-says-space-startup-in-talks-with-potential-investors.html "Virgin Orbit says space startup in talks with potential investors") and consumers.

Many expect Republicans to grill [regulators](https://www.financedigest.com/uk-finance-regulators-should-pay-heed-to-energy-security-policy-says-sunak.html "UK finance regulators should pay heed to energy security policy, says Sunak") like SEC Chair Gary Gensler and financial executives at public hearings, though the Democrats’ continued hold on the U.S. Senate means they can [fend off many challenges](https://www.financedigest.com/amazon-netflixbanking-would-a-subscription-based-model-fend-off-challenger-banks.html "Amazon, Netflix…banking. Would a subscription-based model fend off challenger banks?") to the agencies’ authority.

Jennifer Schulp, a director at the libertarian think tank Cato Institute, said the [Republicans’ unexpectedly tight](https://www.financedigest.com/republican-red-wave-fizzles-but-midterm-race-for-u-s-congress-tight.html "Republican ‘red wave’ fizzles, but midterm race for U.S. Congress tight") margin of control in the House will not prompt them to tone down their rhetoric.

The key to the ability to make noise and to [put up roadblocks in the form of oversight](https://www.financedigest.com/four-corporate-email-oversights-that-put-your-organization-at-risk.html "Four Corporate Email Oversights That Put Your Organization at Risk") turns on which party has control of the House, no matter how slim the majority, because it comes with the ability to control the committees,” Schulp said.

An SEC spokesperson said: “Chair Gensler looks forward to continuing to work with Congress on the [shared goal of protecting investors](https://www.financedigest.com/asian-shares-muted-as-investors-fret-over-china-reopening.html "Asian shares muted as investors fret over China reopening"), maintaining fair, orderly and efficient markets, and facilitating capital formation.

The CFPB did not respond to a request for comment.

‘REGULATORY EXUBERANCE’

Patrick McHenry, a North Carolina Republican in line to lead the [House Financial Services Committee](https://www.financedigest.com/us-house-committee-chair-concerned-by-tesla-deals-in-china.html "US House committee chair ‘concerned’ by Tesla deals in China") in the new Congress, said in an emailed statement to Reuters before the election that Biden’s administration “is pushing its agenda through financial regulators because they don’t have the votes to pass it in Congress.

Committee Republicans will work together to conduct appropriate oversight of activist [regulators and market](https://www.financedigest.com/the-crop-growth-regulators-market-to-have-a-technological-escalation-in-its-armor.html "The Crop Growth Regulators Market To Have A Technological Escalation In Its Armor") participants who have an outsized impact,” McHenry said.

Republicans have also [pressed current Congressional leaders to have Gensler testify on issues like workforce matters recently highlighted](https://www.financedigest.com/briquetting-press-market-expectations-growth-trends-highlighted-until-2028.html "Briquetting Press Market Expectations & Growth Trends Highlighted Until 2028") by the agency’s internal watchdog.

At a minimum, House [investigations and testimonies can take up hundreds of hours of staff time for the regulators](https://www.financedigest.com/australia-financial-crimes-regulator-opens-investigation-into-britains-entain.html "Australia financial crimes regulator opens investigation into Britain’s Entain") and make the agencies more vulnerable to private litigation.

There’s going to be a ton more accountability coming,” the [chief legal officer](https://www.financedigest.com/iris-software-group-names-matt-tuson-as-chief-revenue-officer.html "IRIS Software Group names Matt Tuson as Chief Revenue Officer") of brokerage Robinhood Markets, Dan Gallagher, said at a recent industry event. “This irrational regulatory exuberance is nonsense.”

The hours lost could distract the regulators from finalizing rules, such as the SEC’s efforts to force more transparency on [private equity firms or CFPB efforts to curb bank](https://www.financedigest.com/gucci-banks-on-private-salons-for-the-ultra-rich-to-revive-sales.html "Gucci banks on private ‘salons’ for the ultra-rich to revive sales") fees.

BEYOND THE FIREWORKS

What remains unclear is whether such investigations will lead to more than just fireworks at Congressional hearings. [Democrats retained control of the Senate](https://www.financedigest.com/u-s-senate-democrats-target-big-oil-for-carbon-polluters-fund.html "U.S. Senate Democrats target Big Oil for carbon polluters fund") in the Nov. 8 [midterm elections](https://www.financedigest.com/asia-stocks-advance-as-investors-await-u-s-midterm-election-results.html "Asia stocks advance as investors await U.S. midterm election results") and its powerful Committee on Banking, Housing and Urban Affairs, to date chaired by Sen. Sherrod Brown of Ohio.

Bryan McGannon, [managing director](https://www.financedigest.com/anya-libova-joins-apester-as-uk-managing-director.html "Anya Libova joins Apester as UK Managing Director") for sustainable investment group US SIF, said the power split will stop Republicans from using federal budget maneuvers to interrupt Democratic priorities.

Rather he expects Republicans will propose [big changes](https://www.financedigest.com/from-boom-to-bottom-and-now-big-change-renault-and-nissan-reshape-alliance.html "From boom to bottom and now big change: Renault and Nissan reshape alliance") with little chance of passage. “The appropriations process in the House will be a messaging exercise, and it’s less worrisome since the Democrats will have the Senate,” McGannon said.

To be sure, a separate avenue to undo [business regulation](https://www.financedigest.com/2018-is-a-year-of-regulation-is-your-business-ready.html "2018 is a year of regulation – is your business ready?") could come via the legal system, where a 6-3 conservative majority on the U.S. [Supreme Court](https://www.financedigest.com/court-fees-and-access-to-justice-the-impact-of-the-supreme-courts-decision-on-lenders.html "Court fees and access to justice:  the impact of the Supreme Court’s decision on lenders") has shown an appetite for aggressive action.

In June, for instance, the court curtailed the Environmental Protection Agency’s ability to restrict greenhouse gas emissions from [power plants](https://www.financedigest.com/edpr-brings-iberias-first-wind-solar-power-plant-on-stream.html "EDPR brings Iberia’s first wind-solar power plant on-stream"), and another dispute under deliberation could clear the way for a wave of new challenges to federal regulators.

ANTITRUST CONCERNS

Before the election, exploiting antitrust concerns was seen as an additional area of focus for Republicans, especially on investors’ growing concern for environmental, social and governance (ESG) matters that has led to some joint efforts by [asset management](https://www.financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisation.html "Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation") companies.

On Nov. 3 five Republican senators [warned corporate law firms](https://www.financedigest.com/uk-watchdog-warns-crypto-firms-to-prepare-for-advertising-rule-change.html "UK watchdog warns crypto firms to prepare for advertising rule change") Congress would “scrutinize the institutionalized antitrust violations being committed in the name of ESG.

While those Senators will not be in the majority, House Republicans have also [criticized companies](https://www.financedigest.com/mitigating-supply-chain-risks-five-critical-tips-financial-services-companies.html "Mitigating supply chain risks – five critical tips for financial services companies") on ESG-related matters. Companies including BlackRock Inc have defended their participation in trade groups meant to address topics like climate change, [saying they still act solely for client fiduciary interests](https://www.financedigest.com/czech-interest-rates-already-at-high-level-central-bank-governor-says.html "Czech interest rates already at high level, central bank governor says"). But the high-profile Glasgow Financial Alliance for Net Zero recently relaxed a mandate that its members phase out [fossil fuels](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035") because of antitrust concerns.

In addition, before the election there had been hopes for bipartisan legislation to [regulate cryptocurrencies](https://www.financedigest.com/devere-ceo-cryptocurrency-regulation-is-necessary-and-must-be-welcomed.html "deVere CEO: Cryptocurrency regulation is necessary and must be welcomed") soon.

The collapse of the [FTX exchange dashed those expectations](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles"), and Cato’s Schulp said any bills on the matter likely will have to wait until 2023.

Dante Disparte, chief strategy officer at Circle, the principal operator of one of the world’s largest stablecoins, a type of cryptocurrency, said the FTX saga could lead to comprehensive reforms in the same way the 2008 financial [crisis led to wide-ranging banking](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded") rules.

What I’m hearing, seeing and perhaps hoping, is that the [collapse of FTX](https://www.financedigest.com/collapsed-ftx-owes-nearly-3-1-billion-to-top-50-creditors.html "Collapsed FTX owes nearly .1 billion to top 50 creditors") is met with the same kind of resolve,” Disparte said.

(Reporting by Chris Prentice in Washington and by Ross Kerber in Boston; Additional reporting by Hannah Lang and Diane Bartz in Washington and by John McCrank in New York; editing by Megan Davies and Deepa Babington)


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