Tuesday's election has given us an answer to the basic question of "who?", but that answer only begins to provide a picture of what the new Administration and Congress will look like, and more importantly, how they will govern.

Administration and Cabinet Make-Up

Who fills the key positions in an Obama Administration?

Throughout his campaign, President-Elect Obama has called for the modernization of the regulatory framework of our financial services sector. In March, the current Treasury proposed strengthening the Federal government's role and reforming current oversight. But many current Federal officials with fixed terms will be able to stay into the new Administration.

  • Secretary of Treasury – The President can appoint a completely new team of Secretary and Assistant Secretaries. Speculation is of course rampant, and announcements for the key positions will probably be among the earlier decisions made by the Obama team.
  • Chairman of the Federal Reserve – Chairman Ben Bernanke was nominated and confirmed to a four-year term in 2006. His term and position as Chairman is fixed through 2010.
  • Chairman of the Securities and Exchange Commission – Chairman Chris Cox was confirmed to a five-year term on the SEC in 2005. The new President cannot remove Cox from the SEC, but could appoint a new Chairman.
  • Federal Deposit Insurance Corporation – Sheila Bair was appointed to a five-year term as FDIC Chair in 2006. Her membership on the FDIC Board runs through 2013.
  • Office of the Comptroller of the Currency – Comptroller John Dugan was appointed to a five-year term in 2005, but under the law may be replaced by the new Administration.

Congress

What do the expanded Democrat majorities mean for Congress and the incoming Administration?

As expected, Democrats made significant gains in both the House and Senate. While it appears their efforts will fall short of 60 seats in the Senate, Democrats' increased majorities in both Chambers (at least five in the Senate and 20 in the House) provide President-Elect Obama with the legislative support to back his agenda. Given the nature of the Senate, Republicans on the Senate Banking Committee will continue to have some influence over legislation. Democrats have a rich history of internal disagreements and will not move in lock step. The new Administration will have to sell its plans, especially for the more complicated issues such as financial services regulation.

Senate Banking Committee

What does the Senate Banking Committee look like come January?

Republican Senators Hagel and Allard are retiring. Republican Senator Dole was defeated, as was optional federal charter sponsor Senator John Sununu. Committee ratios will be readjusted, but expect at least three new Republicans and one new Democrat on the Committee.

With Senator Biden going down Pennsylvania Avenue, earlier speculation had Banking Committee Chairman Senator Chris Dodd leaving to replace Biden as Chair of the Senate Foreign Relations Committee. At this point, it appears that Dodd will remain with the Banking Committee.

House Financial Services Committee

What does the House Financial Services Committee look like come January?

The House Financial Services Committee will also feature a very different make-up in the 111th Congress than it did in the 110th. Democratic gains of about 20 seats in the House will result in adjustments of the Democratic/Republican Committee member ratios. The election losses of four Committee Members and retirement of two others will further bring several new Members to the Committee.

One of the surprise stories early in this election cycle was the difficult race for Pennsylvania Rep. Paul Kanjorski who chairs the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises – a subcommittee that will be a focal point in the regulatory restructuring debate in the new Congress. Despite trailing in polls over recent months, Rep. Kanjorski held onto his seat.

Who his Republican counterpart will be on this Subcommittee remains to be seen. The retirement of Rep. Deborah Pryce, Ranking Member of the same Subcommittee, creates an important vacancy for the Republican party. There is some discussion of Republicans restoring Rep. David Dreier to active Committee leadership. Dreier had been a veteran Committee member when he took a leave of absence to be Republican chair of the House Rules committee.