FHLBank Atlanta Legislative Update

FHLBank of Atlanta Legislative Update

The Biden administration and the Democrat-controlled 117th Congress are underway. All are watching as governing agendas move from stump speeches to the much more difficult task of implementing those plans. The year ahead is sure to test how many agenda items fall victim to political realities. Also tested will be President Biden’s pledge to turn down the heat on political discourse and usher in a new era of bipartisan cooperation.

With control of Congress, Democrats are able to set the agenda and control the process, but a sweeping legislative agenda seems unlikely given their razor thin majority. Moderate Democrats like Sen. Joe Manchin (D-WV) are also proving to have an outsized role in determining the direction of the legislative agenda. Sen. Manchin recently pushed back on raising the minimum wage to $15 dollars, suggesting a lower amount would be more appropriate. The White House is now saying a $15 dollar minimum wage is unlikely to pass and they are willing to compromise.

With filibuster rules expected to remain unchanged, most legislation will still require 60 votes for passage, which will force the two parties to compromise or will limit the number of bills that are passed.

To pass a COVID-19 relief bill without having to overcome the 60 vote threshold, Democrats are using the budget reconciliation process, which allows budget related bills to pass with a simple majority. Though the White House expressed a desire to pursue bipartisanship in moving a COVID-19 relief bill forward, urgency led Democrats to use the reconciliation process, which may hinder later attempts at bipartisanship.

Given the expected difficulty passing legislation, President Biden will likely seek to accomplish as much of his agenda as possible through administrative action. This started immediately after inauguration, with the signing of dozens of executive orders on a wide range of topics including action on issues related to COVID-19, financial services, climate change, and racial justice, among a number of others.

New regulations are also expected, including those impacting the financial services industry. For example, reforming the Community Reinvestment Act is high on Biden’s agenda. The focus will be on increasing equity in the housing and financial services industries for low- and moderate-income communities and communities of color. Other changes could seek to reestablish some of the Dodd-Frank reforms that were removed or relaxed during the Trump years. However, with the importance of keeping the economy on even footing, the administration is expected to strike a balance to reduce the risk of slowing or reversing economic growth.

Senate Banking Committee Chair Sherrod Brown (D-OH) and House Financial Services Committee Chair Maxine Waters will focus the efforts of their respective committees on consumer protection, equity in housing and access to financial services, and stronger industry oversight. While they may not be able to achieve a robust legislative agenda, we do expect to see an aggressive hearing schedule that will bring attention to their priority areas. It is also interesting to note that with the additions of Sen. John Ossoff (D-GA) and Sen. Raphael Warnock (D-GA), the Senate Banking Committee now contains seven members that hail from states within the FHLBank Atlanta district.

Republicans in both the House and Senate will likely seek to just play defense over the next two years while eyeing the midterm elections in 2022. The party that wins the White House historically struggles to maintain or increase its majority during the midterms. However, Republicans in a few swing districts may need some accomplishments to campaign on, rather than mere obstructionism.

We will be watching closely to see if moments of bipartisanship can indeed develop over the course of the year, and we will be working hard with both sides of the political aisle to ensure policymakers have the resources they need to make informed decisions. The road ahead may be challenging but wherever there is challenge there is also opportunity. FHLBank Atlanta stands ready to work with CBA and its members to make the most of every opportunity presented.

Michael Huff

Vice President and Director of Government and Industry Relations FHLB Atlanta

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