Win or lose, Warren will put banking in 2020 spotlight
Editor’s note: An earlier version of this post ran in May. It has been updated with the news about Warren’s exploratory committee.
No matter how far Sen. Elizabeth Warren, D-Mass., goes in the 2020 presidential elections, one thing is for certain: She’s going to be a key influence in the race and will help shine a bright spotlight on financial services issues.
Warren, who announced Monday she was forming a presidential exploratory committee as she weighs whether officially to throw her hat in the ring, has taken hits from both the left and right over how she handled a DNA test showing Native American ancestry. Recent polls show her behind other Democratic presidential primary hopefuls, such as former Vice President Joe Biden and Sen. Bernie Sanders, I-Vt.
But earlier polls had shown her leading the pack. In a May poll by Suffolk University, when Warren was added to the mix of possible candidates, the senator garnered nearly 26% of the vote. Biden and Sanders trailed behind her with 20% and 13% of those polled, respectively.
Given her strong showing with the party’s base, Warren is likely to have considerable sway on the party when it comes to financial services, just as she did in 2016. The Democratic platform that year, for example, adopted two significant provisions championed by Warren: postal banking and a return of the Glass-Steagall Act, which would separate commercial and investment banking.
Although it is likely to frustrate many in the banking industry, this means that the Democratic Party is almost certain to remain to the left on issues surrounding banking. Analysts have noted that Warren has been central to keeping financial services policy top of mind for politicians and voters alike more than a decade after the 2008 crisis.
“Her committee membership and her deep understanding from researching the industry is probably the thing that keeps it as more of a top issue than any other force out there,” said Edward Mills, a policy analyst at Raymond James.
Her influence was already on display in the spring with the Senate’s passage of a bill to overhaul parts of the Dodd-Frank Act. While a number of moderate Democrats backed the legislation, Warren remained solidly against it — and so did virtually every one of the party’s 2020 hopefuls, including Sens. Kamala Harris of California, Cory Booker of New Jersey and Kirsten Gillibrand of New York. That was far from a coincidence. Warren’s opposition made it politically untenable for a Democratic presidential hopeful to defect on the bill. That effect is likely to increase as the race for 2020 heats up. What’s more, her populist tone is shared by other potential 2020 candidates, such as Sen. Sherrod Brown, D-Ohio, the Banking Committee’s ranking member.
As a vigorous critic of some of the largest banks and an opponent of the Trump administration’s plans to deregulate the industry, Warren has remained an outspoken voice on the progressive left during the first two years of President Trump’s term. Polling suggests that a progressive platform continues to play well with many Democratic voters. Her pointed opposition to the regulatory relief legislation may have irritated some of her more centrist colleagues in the Senate, but it underscored the threat she poses given her considerable following on financial policy matters. Moderate Democrats have been firm that they will not take another tough vote on legislation if Republicans try to make additional changes to Dodd-Frank.
The bad news for banks is that even if Warren’s candidacy fizzles out and she gives way to a more moderate Democrat or another progressive, the financial regulatory issues that she trumpets will be front and center in the next fight for the White House.
Bankshot is American Banker’s column for real-time analysis of today's news.