WASHINGTON — The Indiana Senate race could prove to be the most important congressional race for bank policymaking if handshake deals propel former Sen. Evan Bayh to the top of the banking committee.
Sen. Sherrod Brown, D-Ohio, is currently the top Democrat on the panel and widely considered the next in line for the chair if his party succeeds in retaking the chamber.
But a Bayh victory in Indiana could upset that plan. The former two-term Democratic senator, who sat on the Banking Committee from 2000 to 2010, may have more seniority than Brown, allowing Bayh to leapfrog his colleague.
The scenario has been quietly discussed among financial services lobbyists, most of whom prefer the more moderate and bank-friendly Bayh to the progressive Brown.
Bayh "has seen upfront a lot of the problems with Dodd-Frank and we are hoping he would be somebody who could stand up to the extremists who don't think there should be any changes to Dodd-Frank," said Howard Headlee, head of the Utah Bankers Association and treasurer of the Friends of Traditional Banking, a financial services super political action committee.
A financial services lobbyist who declined to speak on the record said financial lobbyists are all "talking about this and nobody knows" whether Bayh could get his seniority back and the chairmanship.
Brown's office declined to comment for the story and efforts to reach the Bayh campaign were unsuccessful.
To be sure, any discussion of the chair of Senate Banking is highly speculative. For one, it's not clear which party will control the chamber.
But Democrats have a good shot at retaking control. They need only five seats to regain a majority and most of the battleground Senate races are being defended by Republicans.
Some political observers have said that GOP presidential nominee Donald Trump could drag down Republican candidates by boosting Democratic turnout and alienating independent voters.
If Democrats do win a majority, Brown is the most likely contender to chair the Banking Committee. But Democrats would have to decide if Bayh's previous tenure in the Senate and on the panel counted for the purposes of seniority. If so, Bayh could technically outrank Brown, possibly putting him in line to be chairman.
The decision about seniority is ultimately up to whoever becomes Senate Majority leader, which is widely expected to be Sen. Charles Schumer, D-N.Y., another Banking Committee member.
"It would be Schumer's decision," said Justin Schardin, director of the Bipartisan Policy Centers Financial Regulatory Reform Initiative. "Presumably he would consult with plenty of other people and the seniority is negotiated."
However, Bayh's chairmanship would have to be voted on by the Democratic caucus.
Some financial services lobbyists who support a Bayh chairmanship theorize that Schumer may be open granting Bayh his seniority status. Bayh's July announcement to run for his former Senate seat was a surprise after he initially said he was going to sit the race out. That has given rise to speculation about what promises Schumer and other Democrats made to Bayh to encourage him to run.
"What everybody has heard is that Schumer had been talking to him for months, urging him to get back into the race. And then he didn't, but then all of a sudden he did — what changed?" the lobbyist said.
Mark Calabria, director of financial regulation studies at the Cato Institute and a former senior staff member on the Senate Banking Committee, said Bayh could make a bid to be chair.
"It is possible, if he gets his seniority on the committee back, which isn't a given, but likely," Calabria said.
Bankers view Bayh, an adviser at a public affairs firm and a board member of Fifth Third Bank, as a potential ally.
"He voted for Dodd-Frank, which is a real problem, but he has been on a bank board for the last several years," Headlee said.
The Super PAC Friends of Traditional Banking has identified Bayh as a possible candidate to support in his Senate race, though it is also looking at his competitor, Rep. Todd Young, R-Ind.
"We are cautiously optimistic on that one, his willingness to approach Dodd-Frank," Headlee said of Bayh.
But picking Bayh over Brown would likely start a fight within the Democratic party. Brown is a progressive who has called for higher capital requirements on the biggest banks. He is a close ally of Sen. Elizabeth Warren, D-Mass., another Banking Committee member.
"I find it very difficult to think that in the age of Elizabeth Warren … that Sherrod Brown is going to give up his chairmanship to a reasonably pro-bank kind of person without a fight," the financial services lobbyist said.
A Senate Democratic aide also threw cold water on the idea. "If the beloved Hubert Humphrey lost his seniority when he returned to the Senate after serving as vice president, it seems unlikely that Evan Bayh could trade his private equity and Chamber of Commerce advisory gigs for chair of the Banking Committee," said the aide.
In addition, Brown has a high profile within the party, notably having a prime speaking slot at the Democratic National Convention last month. Usurping his spot on the banking panel may alarm the progressive wing of the party, which already fears that Democratic candidate Hillary Clinton is too moderate.
"The Democratic Party has moved left on financial services policy and those issues are important to the party's base, so if Democrats retake the Senate and Schumer is the majority leader, I don't think he would want to start off with a controversy," Schardin said.
Replacing Brown would also require some deal making and shuffling of other committees as he would have to be appeased with another high-profile assignment.
It's "possible," Calabria said, "but far from a given."