WASHINGTON —Another high-profile departure from the House Financial Services Committee underscores the fading power of first-hand banking expertise in Congress.
There's a dwindling number of bankers in Congress, a trend that could hurt policymaking on banking-focused committees, experts said. The upcoming
Only ten lawmakers were bankers or bank executives in the current Congress. That's down from 16 in the previous one, and an even larger decline from the 18 representatives or senators who were either a banker or bank executive in 2015, according to the
The decline in the number of bankers in Congress could be driven by a number of dynamics, said Cam Fine, president and CEO, Calvert Advisors and former longtime head of the Independent Community Bankers of America.
After the 2008 financial crisis, voters turned on bankers at large institutions, he said, who took the brunt of the blame for the economic damage done at that time.
"After the big financial crisis, the superregionals and the Wall Street banks fell out of favor so to speak and had a black eye," he said. "If you're a person from one of the larger banks, you're just not looked on very favorably."
That's not necessarily the case for community bankers, though, who still tend to rank high in voters' esteem, Fine said. For those bankers, however, the incentive to run for Congress has faded as community banks have become more difficult to run and lawmakers face more 24/7 scrutiny that could impact a family or community banking business. And with Dodd-Frank largely put to bed on the Hill, banking and banking legislation isn't driving voting decisions to the extent that it did even a decade ago.
Aaron Klein, a senior fellow at the Brookings Institution, also said that bankers who might want to run for election might face the stigma associated with 2008 and the role that the banking industry played in the crisis.
"There may also be a lingering political view of finance from the great financial crisis of 2008 that makes people who used to be bankers less electable," he said.
Growing partisanship in the country might also be playing a role, he said.
"Bankers have historically, although not always, have tended to land closer to the center," Klein said. "As primaries, gerrymandering, self-sorting, and other factors produce election winners from further-out parts of the political spectrum, it is not surprising that fewer bankers make it up the political hierarchy."
Looking forward, there's still at least one senior Republican on banking issues who worked as a banker. Rep. French Hill, a former community banker in Arkansas and Republican representative from that state, remains on the committee, where he's currently playing a leading role on crypto policy. He's also one of the frontrunners to take the top Republican spot on the panel next Congress.
Rep. Patrick McHnery, R-N.C., the current chairman of the committee,
"It hasn't been that enjoyable of an experience with everything that happened this Congress, particularly around 15 rounds of voting to elect a speaker," said Aaron Cutler, a partner at Hogan Lovells and former House Republican leadership staffer. "Many members who have been in Congress awhile, I don't think this was an enjoyable one. You think about the sacrifice, being away from your family, and certainly wanting to serve your country and move legislation and achieve policy victories, and I think this Congress has just been tough to really get things done."
Luetkemeyer's announcement that he wouldn't run for reelection surprised some financial policy watchers on the Hill, in no small part because of Luetkemeyer's
"It's a big loss to the committee overall to see somebody who had a good shot of helming the committee decide to retire," Cutler said. "To me, it was surprising. He does have all this amazing banking experience, and the committee really benefited from it."
Fine said that bankers like Hill and Luetkemeyer have played key roles in issues like accounting standards, and recently in providing policy expertise in the bank failures of March last year. Without as much experience on the committee, he said that lawmakers often rely on lobbyists from trade groups and banks to explain complex issues, such as bank capital.
"In the case of the House Financial Services Committee, Hill and Leutekmeyer can offer insights and perspectives that someone who isn't a banker can't," he said. "It's nice to have someone that has direct banking knowledge and understands what it's like to be examined, and what it's like to interact with banking regulators. While the other lawmakers bring their own experiences, they can't appreciate the experience of the bankers if they haven't lived it."
That said, Republicans still have a relatively deep bench, as do Democratic lawmakers, on the House Financial Services Committee. On the Republican front, aside from Hill, Reps. Andy Barr, R-Ky., and Bill Huizenga, R-Mich., are active subcommittee chairs who could make a compelling bid to lead the panel should Hill either also retire or choose not to lead the committee.
"To lose that will hurt, but I'm sure there'll be a lot of members eager to join the Financial Services Committee next Congress," he said. "And certainly, life goes on."
