WASHINGTON Election Day is just around the corner, but control of the Senate may not be determined until early next year, raising questions about how quickly the Banking Committee could get up and running.
Pollsters and political staffers are mostly predicting a Republican Senate takeover in Tuesday's midterm elections. But with the size of any majority controlling the Senate expected to be small and certain races still very tight, it is not clear when the final results will be known. Runoff elections are expected in at least two states: Louisiana and Georgia.
If the outcome is uncertain, it could hinder the committee's organization, several observers said. The panel is assured to get a new chairman regardless of which party wins with current Democratic Chairman Tim Johnson of South Dakota retiring. But any major delays in who is awarded the gavel could slow the hiring of committee staff and the scheduling of hearings, among other effects.
"If we still have uncertainty about control and if the runoffs determine control of the chamber, that affects decisions around the ratios on the committees, negotiations about money and space, and it will definitely have an impact on the schedule," said Dwight Fettig, a partner at Porterfield, Lowenthal, Fettig & Sears and the former staff director of the Banking Committee.
If no candidate wins at least 50% of the vote in both the Louisiana and Georgia races, run-off elections would have to be scheduled, respectively, for Dec. 6 and Jan. 6. It is possible Senate control could still hang in the balance until one or both of those follow-up elections are decided. Observers noted the results could also be contested in other states with tight races. For example, Sen. Al Franken, D-Minn., only formally took his seat after an eight-month recount battle following the 2008 elections.
"[T]here is a decent chance we won't know who wins the Senate on Election Night," wrote Larry Sabato, who runs University of Virginia's Center for Politics, and several colleagues, in their latest Crystal Ball report.
Senate leadership historically adopts an "organizing resolution" at the start of each new term. The agreement between the parties helps determine chamber rules and the ratios of party representation on each committee. But it might be difficult to hash out those arrangements if it is not clear which party is in control.
Those decisions will prove crucial in terms of financial services legislative policy since the Banking Committee will get a new chairman no matter the electoral result.
If the Democrats hold on to the leadership, one of several members could stand to succeed Johnson. They include Sens. Sherrod Brown, D-Ohio, Chuck Schumer, D-N.Y., and Jack Reed, D-R.I. Since none of the three have ever led the committee before, they would likely require some lead time to organize staff and strategize before assuming the post. That would not be the case if the GOP won the majority, in which case Sen. Richard Shelby, R-Ala. who previously served as chairman from 2003 to 2007 is expected to reclaim the gavel.
"Often when you have a new chairmanship, it does take the chairman some time to get his or her feet grounded, but here Shelby is somebody who can hit the ground running," said Edward Mills, an analyst at FBR Capital Markets.
But Shelby's leadership too would be complicated for other reasons if the outcome were delayed.
The Alabama lawmaker may be able to get staff installed and organize the panel more quickly since he has previous experience as chairman. But given limits on how long one member can run a committee, and the length of his previous tenure, Shelby faces a two-year term limit as chairman under caucus rules. Any delays, coupled with the distraction of the 2016 presidential elections, would shorten his window for getting things done.
"He doesn't do things for the sake of doing things. So the bigger question there is: Does he see a window?" said Mills. "If he does, he'll strike while the iron is hot."
The party ratios on each committee will be determined after the elections and will depend on the size of the winning party's majority. But uncertainty over the outcome in only a few races could leave those ratios undecided. Currently, the Democrats on the Banking Committee have a two-vote advantage over the 10 Republicans on the panel.
The drawn-out state battles could also affect the size of committee budgets, hiring decisions and how quickly top staffers can get their team in place for when a new chair assumes leadership.
"The uncertainty definitely impacts your ability to hire the new staff and to figure out who you're retaining," said Fettig.
The majority party on the committee must also address more mundane issues, like the arrangement of office space. But those decisions could also be affected by a delay.
"On the Banking Committee historically" when control switched to the other party, the majority and minority staffs "switched offices, so the whole team moved across the hall," said Brandon Barford, a partner at Beacon Policy Advisors.
Ultimately, the longer it takes to determine party control and make decisions about committee logistics, the longer it will be until lawmakers are able to conduct regular business.
"If Georgia goes into a runoff and determines control of the Senate, you lose most of the month of January," said Barford. "The first Senate Banking Committee hearings could potentially be at the end of January, but they would likely be pushed back until February in that case."
Those first hearings are likely to give industry observers and lobbyists an early glimpse at the tone the new chairman will set and his priorities for the committee.
"The one thing to look at is: How early do they start doing hearings?" said Mark Calabria, director of financial regulation studies at the Cato Institute. "What does the hearing schedule look like? Do they start having legislative hearings, or are they focused on oversight?"