WASHINGTON — A battle over the heart and soul of the Senate Banking Committee is brewing if Democrats succeed in winning back control of the chamber in the election.
Such a victory would likely give the reins of the banking panel to Sen. Sherrod Brown, D-Ohio, and add momentum to efforts to add more progressives like he and Sen. Elizabeth Warren, D-Mass., to the committee.
Liberal groups have already sent a letter to Sen. Chuck Schumer, who is expected to become Majority Leader if Democrats win, warning him to appoint senators to the panel who favor Wall Street reform.
"The committee already conspicuously harbors several of the Democratic Caucus's most conservative, Wall Street-friendly members," said the letter, which was signed by several progressive groups, including Rootstrikers, a Wall Street reform wing of online activist group Demand Progress. "For the party to live up to the promise of its new platform, which demands a stronger financial regulatory framework, the Senate Banking Committee next session must include more members with a demonstrated commitment to the work of financial reform."
But such demands are not easily granted, and other factors, including the 2018 midterm elections, are expected to play an outsized role in who joins the panel.
At issue is the membership of the 22-member committee, one of the most prominent panels in the Senate which serves as a hugely influential voice in banking policy, not only for its legislative activities, but also its oversight and confirmation powers. Most key banking policy nominations will have to be cleared by the committee, including the heads of the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. when their leaders' terms expire over the next few years.
Currently, Republicans hold a two-seat majority on the panel, 12 to 10, reflecting the divide in control in the chamber at large. But the GOP is bracing for several potential losses in the election, particularly as Republican presidential candidate Donald Trump's poll numbers have dropped in key battleground states like Pennsylvania, where GOP Sen. Pat Toomey, a banking panel member, is waging a challenging re-election campaign.
Many political analysts are predicting that Democrats are likely to pick up enough seats to win the chamber, but the final division is liable to be close. Democrats will probably hold just a one-member majority on the Senate Banking Committee.
As it stands, Brown would likely find it tricky to balance the calls from progressives like Warren and Sen. Jeff Merkley, D-Ore., on the one hand and moderates like Sens. Heidi Heitkamp, D-N.D., and Mark Warner, D-Va., on the other.
"I could imagine a world in which the chair is just trying to keep his own caucus members in line for the next two years," said Kurt Walters, campaign director at Rootstrikers.
Schumer and Brown must also keep an eye on the 2018 campaign, which is not as favorable to Senate Democrats. Five Democratic members of the current panel are up for re-election. That could make them eager to deliver something to constituents, particularly community bankers back home who are anxious for regulatory relief.
"Next cycle, a lot of moderate Democrats will be up for re-election, and I am sure they will be looking to get something done in the short term on regulatory relief to show that they can get some things done," said Paul Merski, executive vice president of congressional relations at the Independent Community Bankers of America.
And though Brown is a progressive, he also may seek to help the large regional banks that have big presences in his state, including Fifth Third Bank, KeyCorp and Huntington.
"He certainly cares to some extent about the banks in Ohio… there is an issue of what are you going to deal with in that regard," said Mark Calabria, director of financial regulation studies at the Cato Institute.
But Walters said Brown will still push for tough financial regulation. "It is not like he is from some true-blue state. Ohio is a swing state that is trending red, if anything, and still, he is one of the strongest voices on being tough on Wall Street and standing up to the big banks."
But who gets added to the committee is shaping up to be a significant challenge for Schumer. A spot on the banking committee is excellent for fundraising, something vulnerable Democrats will need ahead of the next election cycle.
"As soon as the election is over, they will turn their sights to, 'OK, we just won back the majority, but how do we retain it two years from now?' " said Timothy Jenkins, a partner at Nossaman. "The Democratic Leaders are going to want to reward the new members who won the battleground races with good committee assignments, including the Banking Committee. But this could be tempered by the laser-focus on protecting the most vulnerable members up for re-election in 2018, including by preserving and enhancing their committee slots."
Progressives would like to see senators like Tammy Baldwin, D-Wis., who has been critical of the "revolving door" from Wall Street or Kamala Harris, who is running for Senate in California, be appointed to the committee.
But the banking industry favors policymakers like Sen. Gary Peters D-Mich., a moderate who isn't up for election until 2020 and was previously an active member on the House Financial Services Committee when he was in that chamber. Likewise, Rep. Patrick Murphy, D-Fla., is running against Sen. Marco Rubio, R-Fla., and has banking experience on the financial services panel. Additionally, Evan Bayh, another moderate who is running for Senate in Indiana, was on the Banking Committee before stepping down several years ago.
Progressives are also wary of Schumer himself, who has tight ties with banks given that his district includes Wall Street. Some argue that he would be unlikely to appoint to the panel more policymakers who want to break up the big banks.
A more moderate panel could also benefit Hillary Clinton if she wins the presidency, helping her to resist efforts by Warren and others to push her to the left, particularly on appointments.
For his part, Walters said Schumer's allegiances to the party will trump his loyalty to New York.
"I think anytime a particularly Senator becomes leader of the party at large they need to represent the priorities and consensus of the party at large and that consensus is reflected in the Democratic party platform," alters said.