WASHINGTON — The announcement Tuesday by Sen. Orrin Hatch that he will retire at the end of the year could have a ripple effect throughout the Senate, including the leadership of the Banking Committee.

It was not a surprise that Hatch, an 83-year-old Utah Republican who chairs the Senate Finance Committee, decided to leave after more than 40 years in the Senate. But his departure will leave an opening to oversee one of the Senate's most coveted panels.

Senate Banking Committee Chairman Mike Crapo, R-Idaho, is third in seniority among Republicans on the Finance Committee. He may want to trade up to what is viewed as a more prominent chairmanship, leaving an opening atop the banking panel. That could in turn affect the committee's agenda on everything from reforming the government-sponsored enterprises to regulatory reform.

Sen. Orrin Hatch, R-Utah
Sen. Orrin Hatch's retirement leaves an opening for senators to jockey to become chairman of the Finance Committee, which could lead to a separate opening for chairman of the Banking Committee. Bloomberg News

“Whenever a coveted position like chair of Senate Finance opens, there will be many contenders,” said James Ballentine, executive vice president of congressional relations and political affairs for the American Bankers Association. “Chairman Crapo, who has done a great job of leading the Senate Banking Committee, has enough seniority to be strongly considered to lead Finance.”

If Crapo gives up the Banking Committee gavel next year and the GOP holds the Senate in midterm elections, Sen. Pat Toomey, R-Pa., would stand in line potentially to become chairman of the banking panel. Sens. Richard Shelby, R-Ala., and Bob Corker, R-Tenn., have both served on the banking panel longer than Toomey, but Shelby — a past chairman — is termed out and Corker announced earlier this year that he also plans to step down from the Senate.

It is not completely clear what Toomey would prioritize. Like Crapo, the Pennsylvania senator supports regulatory relief. Recently, Toomey has helped lead the charge in classifying Obama-era regulatory initiatives as eligible for congressional rollback through the Congressional Review Act.

Toomey has supported rolling back parts of the Dodd-Frank Act in the past, including eliminating Title II, which established the “orderly liquidation authority” allowing regulators to unwind a failed megabank in a manner meant to avoid a systemic collapse. Toomey has introduced legislation that would replace the current resolution with a specialized bankruptcy process to handle the failure of a large bank.

But the biggest impact of a possible GOP changing of the guard on the Banking Committee would perhaps be on housing finance reform.

Crapo has been one of the most active lawmakers in trying to advance housing finance proposals, having led discussions in 2013 and 2014. Those efforts are expected to pick up in earnest in the first half of 2018.

If he intends to put his hat in the ring for chairmanship of the Finance Committee next year, that could further motivate him and other members to try to move quickly on reforming Fannie Mae and Freddie Mac. Other key GOP players in housing finance reform discussions include Corker and House Financial Services Committee Chairman Jeb Hensarling, R-Tex., who are both stepping down from Congress next year.

It will ultimately be up to Republican senators to decide who takes the gavel of the Finance Committee, and the question would be moot if Democrats seized control of the Senate in midterm elections and in turn assumed the committee chairmanships.

And if the GOP held control, Crapo could face competition to chair the Finance Committee, including from Sen. Chuck Grassley, R-Iowa. He is a past chairman and still has two years of eligibility under Republican term limits. However, Grassley also currently serves as chairman of the Senate Judiciary Committee, another highly regarded panel.