Elections have consequences

“Elections have consequences. I won,” President Obama told congressional Republicans shortly after his inauguration in 2009. Along with Democratic super majorities in each house, he was able to use the next two years to pass an $800 billion stimulus, a sweeping health care bill and the Dodd-Frank Act.

Elections then had consequences that resulted in a Tea Party takeover that led to a Republican House majority in 2010 and a Republican-controlled Senate in 2014. It turned out that the coalition that elected Obama twice — young voters, minorities and white liberals — did not show up in strong enough numbers for House and Senate races or for Hillary Clinton.

The electoral victory of Trump in 2016 set up a different dynamic of opportunities and vulnerabilities. Trump and Republican majorities passed legislation and lightened regulation that has arguably resulted in strong economic growth.

Trump’s behavior, however, resulted in a loss of his supporters that allowed the Democrats to regain control of the House. The GOP held up well with white voters without college educations but lost support among college-educated white voters. In 2016, the college-educated voted for Trump 48-45 but in 2018 they supported Democrats 53-45.

Texans in two House districts elected Democrats over Republican incumbents in districts that had voted for Trump. (There has historically been a difference between mid-term and presidential elections, but the trend here does not bode well for Trump.)

What could happen in November? Control of the executive branch means a lot for a highly regulated industry like banking. Legislative policy, control of the Treasury and eventual control of the regulatory agencies are all up for grabs.

Democratic presidential candidates have fallen over themselves to cater to a progressive left that is hostile to commercial banking interests. The left couches its rhetoric as focused on big banks but, as we have seen with the implementation of the CFPB, regulatory costs can be more easily absorbed by the bigs while the community banks are hit harder.

One issue of particular concern that could be in play is the creation of a HMDA-like fair lending regime for minority and women-owned businesses. Dodd-Frank requires the CFPB to establish such a system. CFPB Director Kathy Kraninger is moving cautiously on this and could conclude it can’t be done without harming the parties it is designed to benefit.

Treasury Secretary Mnuchin believes the requirement should be repealed. A Democratic administration would have no qualms about its implementation and would mos