With Obama holding on to the Presidency and Banking Chairman Tim Johnson, a South Dakota Democrat, announcing on March 26 that he won’t seek a fourth Senate term in 2014, Charles Schumer appears to be the leading candidate to take over the position. In addition, to overseeing the banking industry the committee also oversees housing and urban affairs, given that there are no “urban areas” in South Dakota, it’s safe to say this committee’s primary focus is the banking industry.
For anyone who has followed the career of Sen. Schumer, there is little question that his aspirations lie in becoming the Senate Majority Leader if not beyond. Unfortunately for him, the present Majority Leader, Harry Reid, has given no indication that he is interested in stepping down from the post and isn’t up for reelection until 2016. Additionally, Richard Durbin (D-IL) would be chosen as the second most experienced Democrat in the senate.
Consequently, the Banking Chairmanship is far more likely for Schumer at present.
“The chairmanship is Schumer’s for the taking but it seems like his aspirations are to be majority leader, and you don’t usually become majority leader by taking over the Senate Banking Committee,” said Jaret Seiberg, senior policy analyst at Washington Research Group, a unit of Guggenheim Securities LLC.
And Banks have no problem with this. The position itself is highly sought after due the immediate inflow of campaign contributions from Wall Street and others, though frankly, Schumer already receives these monies as a New York Senator and generally friendly attitude to the Street. His donor list reads like a “Who’s Who of Wall Street.” And for Wall Street a choice between Schumer and Sherrod Brown of Ohio, an outspoken critic of Wall Street, is no choice at all.
With Brown as chairman, banks “would have to worry about the rhetoric coming out and the hearings,” said Mark Calabria, director of financial regulation studies at the Cato Institute, a group in Washington that advocates for small government, and a former Republican Senate Banking aide.
“But it’s not clear to me that there is a majority support for breaking up the banks on the committee,” Calabria said.
Brown scares Wall Street. He has not hesitated to say that “Too Big To Fail” has not been properly addressed and with each banking scandal he ups his rhetoric. It’s far more likely that another scandal will precede any real effort by larger banks to clean up their practices by themselves, so expect more rhetoric from Sen. Brown. Rhetoric forms public opinion and presently big banks enjoy the scorn of the nation almost as much as America’s dislike and distrust of Congress.
The two potential downsides for Schumer in accepting the gavel are that the Banking Chairmanship is not viewed as a position that helps you towards your goal of Majority Leader and that he would be forced by Senate Rules, which don’t allow a Senator to chair two committees, to give up his gavel at the Senate Rules and Administration Committee. A committee that may sound trite until you remember that it controls what a number of senators truly care about….their parking spots and office spaces.