Crypto, Epstein are Dems top oversight targets next Congress

• Key insight: The degree to which oversight presents a risk to banks and other financial firms might hinge on the Senate outcome on Tuesday and the extent to which banks have exposure to either disgraced financier Jeffrey Epstein or President Trump’s crypto businesses. 
• Forward look: Regardless of whether Democrats win majorities in the election, banks should expect more scrutiny in the next Congress, particularly for large banks and crypto firms. 

WASHINGTON —  Banks and financial firms will likely face a different congressional oversight environment next year as polling suggests Democrats are poised to take back control of both chambers of Congress. 

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Experts say that crypto and the largest banks are the most likely targets of oversight if Democrats retake control, particularly those with exposure to President Donald Trump’s cryptocurrency business. 

Democrats are widely expected to win back the House on Tuesday, which would put Rep. Maxine Waters, D-Calif., in line to lead the House Financial Services Committee. She might face some inter-party competition for the gavel, three sources familiar with negotiations say, primarily from Rep. Sean Casten, D-Ill., but Waters’ seniority and experience on the committee will likely be enough to win her the gavel, and she can be expected to use it to usher in a more aggressive oversight agenda for banks and financial firms. 

The fate of the Senate is less certain. While experts agree there are several paths to Democrats retaking the upper chamber, there are just as many paths for Republicans to eke out a bare majority, or even a 50-50 split. A Democratic takeover of the Senate would bring an even more consequential shift, with longtime Wall Street critic Sen. Elizabeth Warren, D-Mass., likely to take the chairmanship of the Senate Banking Committee, and with that power will be able to block any White House nominations for bank regulators, including the Federal Reserve.   

To be sure, the amount of actual legislating that Democrats could do would be limited. President Donald Trump would veto most legislation, and even if Democrats win the Senate, they wouldn’t have a filibuster-proof majority, and would need to get some Republican support on anything that would have to pass. 

But Democrats can still do a lot with those committees’ gavels, including the power over hearing schedules, the ability to issue subpoenas and control over hearing witness lists. 

Bart Naylor, a financial policy advocate at Public Citizen, said Trump’s crypto ventures will be a prime target for Democrats, particularly concerning potential conflicts of interests involving his family and companies affiliated with the administration. Public Citizen has argued that Trump’s meme coin and other crypto-related dealings raise legal and constitutional questions under the emoluments clause.

“Public opinion polls show that, while the majority of Republicans think this is probably suspect, they’re not sure they think it’s a conflict of interest,” Naylor said. “Simply further establishing that Trump’s crypto grift is a conflict and, in my opinion, a legal violation, I think is important.” 

Those inquiries could include subpoenas for Trump and people affiliated with his crypto ventures, Naylor said. 

Democrats, especially Warren, will likely return to scrutinizing large banks, including bringing the chief executives of the largest institutions before congressional committees, and focus on the Trump administration’s financial regulation rollback. 

The extent of that scrutiny would depend heavily on the Senate results, said Brian Gardner, chief Washington policy strategist at Stifel. If Democrats win the House but Republicans retain the Senate, oversight of the financial sector would largely fall to Waters and the House Financial Services Committee.

Gardner expects Waters to hold hearings with financial regulators and criticize the administration’s changes to banking regulation. She could also bring large-bank CEOs before the committee, although he expects housing to be a significant priority for her.

A housing bill could also create a small opening for some legislative action on community banks, Gardner said. Waters would need Republican support to advance such legislation, and Waters has signaled openness for bills specifically affecting smaller institutions with less than $10 billion in assets. 

A Democratic Senate would create a more challenging environment for the banking industry, Gardner said. Warren would have greater resources and more leverage over the administration as Banking Committee chair, including influence over nominations. She is also more attuned to bank regulatory issues, and would usher in more aggressive scrutiny of large banks, consumer protection and the Trump administration’s deregulatory agenda. 

Legislatively, there’s also small pockets of opportunity for certain bills to pass, particularly those that fall within a slim range of issues where Warren’s camp and Trump agree — notably on credit card interest rates. 

For financial firms, the most immediate consequence of a Democratic takeover may be reputational risk rather than changes to the rules governing their businesses. Gardner said he expects additional investigations into the relationship between financial institutions and Jeffrey Epstein. 

“Democrats smell blood in the water on Epstein,” Gardner said. “The practical implications are limited, and they are limited to reputational and headline risk that oversight and investigations can uncover something that is not in the public sphere.” 

Crypto firms are also preparing for a more difficult political environment. Mary Cull, chief business officer at Cryptex Finance, said she expects investigations into ethics and potential conflicts involving the White House and cryptocurrency companies. She also said a Democratic Senate could complicate efforts to advance crypto market structure legislation.

Cull said the industry continues to want clearer rules as banks and other mainstream financial institutions adopt blockchain technology. The industry, she said, needs a framework that allows innovation while protecting consumers.

“In this administration, I think that crypto has been the darling,” she said. “It’s been the thing that the Republicans have been obviously pushing through. Obviously there’s going to be backlash no matter what happens because it is Washington.” 

Banks should pay attention not just to the immediate oversight agenda, Gardner said, but also to how Democrats define their priorities in the next two years ahead of the presidential election. Hearings and investigations could help establish the policy debates that would shape a future administration, even if they do not produce immediate legislative changes.

“I think the next two years are going to be a lot of posturing about what Democrats would do if they had the White House back,” Gardner said.