December is always a good time to reflect on the year in banking policy. Was it a good year for financial services legislation? Yes, we’d argue.
Was it also a terrible year? Yes.
Hear us out: We think 2023 was great for the actual development of financial policy. Overlapping crises from across the U.S. economy and the globe pushed lawmakers to weigh significant changes to the laws undergirding our financial system, whether that was the spring’s miniature banking blowup or the year-long crypto winter.
The Senate Banking Committee, chaired by Sen. Sherrod Brown (D-Ohio), came back to legislative life this year, holding a markup for the first time since late 2019. The result was a set of banker accountability standards that saw near-universal bipartisan support from the panel’s members. That was no small feat.
The House Financial Services Committee, led by Rep. Patrick McHenry (R-N.C.), cleared dozens of bills during several markups this year. Many of those bills had bipartisan support, including legislation that would transform the legal environment for the crypto sector.
But 2023 was terrible for legislative progress. Neither banking panel saw their marquee bills get a vote in the House or Senate, let alone sent on to the president’s desk. The only partial exception was the FEND Off Fentanyl Act, which was added to the Senate’s annual defense authorization package before being stripped from the final product.
A lack of floor time has felled many bills but these financial services packages had a better shot than most. Senate Majority Leader Chuck Schumer spoke frequently about policy proposals coming out of Brown’s committee including cannabis banking reform and banker accountability legislation. And McHenry was about as close an ally of House Republican leadership as a lawmaker can be.
But historic dysfunction in the House ate through weeks of floor time following the ouster of former Speaker Kevin McCarthy. Brown told us that “chaos” affected the Senate’s ability to function, too.
“All the chaos in the House and the fact that they all acted like children kept this stuff from [happening],” Brown said. “We should have passed Ukraine [aid] in October. We should have passed Israel [aid] by now.”
“None of it’s resolved, and there just is not time on the floor,” Brown added. “I don’t like to point fingers, but this is all in the House.”
The Senate had its own problems, to be clear, including glacial funding negotiations, Sen. Tommy Tuberville’s (R-Ala.) months-long hold on military promotions and more.
“Senate inaction is the reason,” Rep. Andy Barr (R-Ky.) said. “Yes, we need floor time, but we’re busy. We’re sending over a lot of good bills to the Senate, and unfortunately, it’s a graveyard over there for good ideas.”
We’re broadly optimistic about the opportunities for moving policy in the first quarter of next year, thanks to unusual government funding deadlines coming up in January and February. A lot of lawmakers are too.
“You either have an expansive view of the year that’s 15 months long, or you have to acknowledge that the first quarter of next year has a hot set of opportunities to move major legislation in other vehicles,” McHenry said. That’s “traditionally how we’ve done [policy] for the last 20 years, frankly, for financial services,” he added.
But this is a pretty tight window, thanks to the general election. “My hope is that we can bring some of these things over the finish line in the limited period next year before people get very November focused,” Rep. Jim Himes (D-Conn.) said.
– Brendan Pedersen