Banks are breathing a sigh of relief after established GOP incumbents bested a handful of Tea Party challengers at the polls recently.
Industry sources said the establishment wins improve Republican odds of retaking the Senate, which would in turn lead to a friendlier climate for the long-beleaguered sector. But some note that the Tea Party has left a mark on the Republican Party, presenting a challenging landscape for the industry.
The Tea Party movement can trace its roots back to fury about bailouts and banks, but the force that pulled the Republican Party right in recent years is finding less success at the polls recently.
In Idaho, Rep. Mike Simpson (R-Idaho) was repeatedly blasted by outside groups for his 2008 vote in favor of the Wall Street rescue, but he soundly defeated his conservative challenger all the same.
Voters in Georgia, Oregon and Pennsylvania also opted for more mainstream candidates as opposed to conservative upstarts. And in Kentucky, Senate Minority Leader Mitch McConnell (R-Ky.) trounced his primary challenger, Matt Bevin, who made McConnell’s vote in favor of the bailout a central plank of his campaign.
The recent shift away from feisty conservatives who are antagonistic toward Wall Street is a welcome development for a sector long in the political crosshairs of those at both ends of the political spectrum.
“The fact that [Sen.] Ted Cruz [R-Texas] will not have a whole lot of new allies is very encouraging,” said one senior financial industry executive.
Conservative pressure was a critical component to a number of economically-tumultuous standoffs in recent years, including the government shutdown and several battles over the debt limit, even as the financial industry pushed for lawmakers to not rock an iffy economy.
But financial-sector pleasure at conservative defeats should not be mistaken for a sign that banks are warming to Democrats. To the contrary, the biggest boon for banks from the primary results is the improved odds that the GOP can take control of the Senate.
In the last several election cycles, conservative challengers have defeated more established Republicans in the primary, only to see them falter in the general election, handing Democrats seats. That seems less likely to happen this time around.
Banks are also watching election returns this year with one eye on a lawmaker who isn’t even on the ballot in 2014.
Sen. Sherrod Brown (D-Ohio) is not up for reelection until 2018, but he currently occupies the inside track to take over the Senate Banking Committee in the next Congress once Chairman Tim Johnson (D-S.D.) retires.
Brown is a frequent critic of Wall Street, and has advocated for tougher restrictions on the industry.
With more mainstream candidates on the general election ballot, financial industry advocates are hoping Senate power changes hands, and shifts that panel’s gavel away from Brown.
Public anger over banks and the bailout have fueled conservative gains in prior years. Former Sen. Bob Bennett (R-Utah) was ousted by Utah Republicans in 2010 in large part due to his vote in favor of the bailout, clearing the way for Sen. Mike Lee (R-Utah).
In the most recent election, established business interests have taken a more invested role. The U.S. Chamber of Commerce became more actively engaged in individual races, backing preferred candidates sympathetic to their causes.
But industry advocates do not expect everything to be plain sailing from here. Instead, the murky political layout means the financial sector is taking things on a candidate-by-candidate basis.
“As an industry, we have to look at every member of Congress independently, we can’t just assume that there’s going to be one party for us and one party against us,” said Francis Creighton, head of government affairs for the Financial Services Roundtable.
And there still seems to be some potency to bailout bashing, even if its effectiveness came from an unexpected source. In Kentucky, Bevin made a habit of hitting McConnell for supporting the Troubled Asset Relief Program back in 2008. But McConnell’s team went on offense, dubbing him “Bailout Bevin” after it was revealed Bevin signed a document calling the federal rescue of the financial sector was a “positive development” shortly after it was passed.
Wall Street is not resting on its laurels, believing anti-bank fervor could be taking a brief hiatus, with many anticipating more criticism will be heard on the presidential campaign trail.
The GOP field looks wide open, leaving plenty of room for a conservative lawmaker to step up and pull the debate to the right. And on the other end of the ticket, Sen. Elizabeth Warren (D-Mass.) has said to anyone who will listen that she is not running. But Sen. Bernie Sanders (I-Vt.) has not ruled it out, and he could pull the debate far to the left in the presidential primary.