The 2018 Midterms and Their Impact on Banking

Analysis from the congressional relations and political engagement teams at the American Bankers Association
Updated on Nov. 30, 2018

Initial results show that the hard-fought 2018 midterm elections met most expectations leading into Election Day and produced significant changes for the next Congress. Since 1974, the president’s party has lost an average of 23 seats in midterm elections; in that sense, this year was no different. But because the margin in the House was already thin, the Democrats’ gain has given them the majority. With the Republicans adding two seats to their control of the Senate, the result is a divided government that will require consensus-building and strong bipartisanship to see any law enacted.

Following is an analysis of this new environment and how it will affect banking policy. ABA and the banking industry have a history of working effectively with both parties and will continue to do so as we promote policies that help banks’ customers, their communities and the economy grow. Our agenda and advocacy on behalf of America’s banks will not be affected by the outcome of the midterms.


The latest results of the 2018 midterm elections show Republicans adding two seats to their margin in the Senate but failing to retain the majority in the House. In a strong showing, particularly in suburban areas, Democrats regained the House majority by winning 40 seats. Minority Leader Nancy Pelosi (D-Calif.), who previously served as speaker from 2007 to 2011 is primed to reclaim the gavel and become speaker for the second time. Republicans will retain control of the Senate, and Democrats will control the House. The House currently stands at 235-200 in favor of the Democrats, while the Senate stands at 53-47 in favor of the Republicans.

Much like the past few cycles, hyper partisanship has continued to drag the political parties further away from a governing middle. This election saw advocates of the industry on the Senate Banking Committee—Sens. Joe Donnelly (D-Ind.), Heidi Heitkamp (D-N.D.) and Dean Heller (R-Nev.)—lose their re-election bids.

While pre-election agendas are designed for campaigns, post-election agendas include a more balanced mix of substance and politics—in this case, political positioning in advance of the 2020 presidential election. With such a narrow majority in the House, expected Speaker Pelosi will have to balance the priorities of her more progressive caucus with those of centrist Democrats who ultimately helped their party win the majority. House Democrats have been outspoken on the need for additional oversight of government agencies and the policies put forward by the Trump administration, and that will put oversight of the current administration at the top of the House’s agenda.

On the legislative front, health care, infrastructure and immigration are expected to dominate. Achieving success on these and other issues in the House will be challenging with a narrow majority and will require a great deal of compromise on any proposals moving through Congress. House Republicans, on the other hand, will be faced with decisions on when to compromise to advance bipartisan legislation and when to oppose Democratic agendas that strongly conflict with their party ideology, again with an eye towards the 2020 election. In short, we are likely to see robust debate in the House on a broad swath of issues and an unclear picture of what bipartisan legislation can actually be advanced.

With gains in the Senate, Majority Leader Mitch McConnell (R-Ky.) will continue to pursue proposals that push forward the administration’s agenda. While the majority leader has been a solid advocate for the administration, he is also practical on legislative matters and is only willing to pursue measures that can garner the required votes in the Senate. With continuity in Senate leadership and on most committees, the Senate will serve as the more pragmatic side of Capitol Hill and will pursue measures that will advance Republicans’ agenda while gaining a measured amount of bipartisan support. The Senate, like the House, will also be moving forward in the shadow of the 2020 election, which will further complicate efforts to find bipartisan compromises on issues of concern to the banking industry.


While the 2018 Senate map was an uphill battle from the onset for Democrats, who had 26 seats up versus eight for the GOP, Democratic candidates had a clear cash advantage in every competitive election except Florida, yet Republicans gained 2 seats for a 53-47 majority. With Republicans maintaining control, Senate leadership will remain largely intact, while some committee chairs are expected to be shuffled. McConnell is expected to continue as majority leader and Sen. Chuck Schumer (D-N.Y.) will continue as Senate minority leader.

Some committee shuffling will take place. Sen. Chuck Grassley (R-Iowa) will leave the Judiciary Committee and will become chairman of the powerful Finance Committee. Sen. Lindsey Graham (R-SC) will then become chairman of the Judiciary Committee. Senator Mike Crapo, currently chairman of the Banking Committee would have been in line for the chairmanship of the Finance Committee had Grassley remained chair. Instead he will continue to serve as chairman of Banking, where he has made notable progress in moving bipartisan proposals, namely this year’s regulatory reform package, through the Senate. We expect Chairman Crapo to make data security, GSE reform, and AML/BSA reform his top priorities for the upcoming Congress.

With at least two of the moderate Democrats on the committee losing their seats, it may be difficult to identify bipartisan coalitions among committee members. Republican gains will likely alter the committee’s ratio, giving them a majority of at least two seats on the panel. While the increase in Republican seats may offset some of the moderate Democratic losses, it is still important that measures receive bipartisan support prior to reaching the Senate floor.

Sen. Sherrod Brown (D-Ohio), who handily won re-election, will remain the ranking Democrat on the Committee. Brown was an outspoken opponent of S. 2155, and we expect him to maintain that posture if committee leadership pursues additional Dodd-Frank Act reforms or changes to consumer protection measures. Potential areas of bipartisan agreement could arise in some key areas for the banking industry, including Bank Secrecy Act and anti-money laundering reform, government-sponsored enterprise reform and cannabis banking.

House of Representatives

This election proved disappointing for House Republicans, who have held the majority in their chamber since 2011. Democrats picked up 40 seats.

Pelosi’s leadership team—currently Minority Whip Steny Hoyer (D-Md.) and Assistant Leader James Clyburn (D-S.C.)—were both elected by acclamation to majority leader and majority whip, respectively. Rep. Ben Ray Lujan (D-NM), currently the chair of the House Democratic campaign arm, will serve as assistant Democratic leader and Hakeem Jeffries (D-NY), having narrowly defeated Rep. Barbara Lee (D-TX), will serve as the Democratic caucus chair.

Every House committee will see a change in leaders and a dramatic change in priorities. Democrats have a very seasoned group of members whose positions on issues are well known. If past is prologue, Pelosi will give her committee chairmen discretion to operate the committees as they see fit, but the speaker will ensure that the committees’ agendas are aligned with the messaging needed to advance the party’s priorities.

One of the most significant shifts will be in the leadership of the House Financial Services Committee. With the retirement of term-limited Chairman Jeb Hensarling (R-Texas), the committee would have experienced a leadership change regardless of the shift in party control. However, the change to expected chairwoman Maxine Waters (D-Calif.) will present one of the more pronounced re-orderings of legislative priorities in many years. Moreover, committee membership will be profoundly different than the previous Congress given the retirement of 12 incumbents, along with panel members who lost their re-election bids. Republicans will also select a new ranking member on the committee. Potential candidates are Reps. Patrick McHenry (R-N.C.), Blaine Luetkemeyer (R-Mo.), Frank Lucas (R-Okla.), Bill Huizenga (R-Mich.) and Sean Duffy (R-Wis.).

This past Congress, the House Financial Services Committee moved more than 130 bills through the committee. Many of these proposals addressed longstanding concerns of the financial services industry. While many failed to move through the Senate or become law, some significant measures were included in the enacted regulatory reform measure, a proposal that Waters actively opposed.

The banking industry has not been aligned with Waters on a number of issues, but there are several—including data security, anti-money laundering and Bank Secrecy Act reform, government-sponsored enterprise reform and cannabis banking—that have received bipartisan support. We expect moderate Democrats and Republicans on the committee to push these issues, and that they will receive consideration in the upcoming Congress. ABA will engage Rep. Waters and other members of the panel to find other areas of common ground. Waters has actively advocated for greater oversight of the financial services industry, and we expect her to use the chairmanship to bring regulators and banking executives before the committee on a variety of issues.

Ballot initiatives

With respect to some other issues being watched closely, the elections also saw a defeat of a Los Angeles ballot initiative authorizing the city to explore creating a “public bank.” This was a significant outcome as a number of other jurisdictions have been eyeing the creation of such banks both as a vehicle for banking marijuana and for providing general banking services.

Voters approved marijuana-related ballot initiatives in three additional states—for adult use in Michigan and for medicinal use in Utah and Missouri—while North Dakota voters defeated an adult use initiative. With respect to the marijuana ballot initiatives, this brings to 33 the number of states that have approved marijuana sales in one form or another, with 10 states now permitting general adult use in addition to medicinal purposes.


Working hand in hand with ABA’s congressional relations team and our partners in the ABA-State Association Alliance, ABA BankPac invested $3,186,700 in supporting pro-banking incumbents and candidates in 46 states during the 2017-18 election cycle: $2,348,700 to 328 incumbent re-election committees; $442,000 to 92 incumbent leadership PACs; $306,000 to 47 open seats or challengers; and $90,000 to campaign committees and ideological PACs. BankPac maxed out ($10,000 total investment) to 169 candidates.

Ninety percent of the candidates supported by BankPac were successfully elected or re-elected, reinforcing the importance of delivering on BankPac’s sole purpose: to help elect pro-banking decision makers to federal office. Of the total, 92 percent of BankPac-supported House candidates won their races this year, as well as 71 percent of BankPac-supported candidates in the Senate.

BankPac has raised nearly $1.5 million year to date and is closing the election cycle with $2.1 million cash on hand.

ABA Voter Education Fund

ABA launched the Voter Education Fund in early 2018 to exclusively fund political activities using the ABA brand. These activities include independent expenditures, electioneering communications, polling, research and “get out the vote” efforts. All of the VEF efforts were made in partnership with our valued state bankers association partners.

During the 2018 cycle, nearly $1.35 million was spent on political activities in 12 races, in support of pro-banking Republicans and Democrats across the country. These political activities were tailored to make an impact on the electorate of each individual’s district or state, highlighting the work these representatives and senators have done to advance pro-growth initiatives in their communities. The VEF ran television and digital advertisements in English and Spanish, as well as print ads in Spanish and Vietnamese, ensuring our message was heard throughout the diverse demographics of each targeted race. Overall, the candidates that the Fund supported this cycle performed well during the midterm elections, winning seven races with three races still too close to call.

  • Rep. Andy Barr (R-Ky.-6) – Win (51%-48%)
  • Rep. Ted Budd (R-N.C.-13) – Win (51%-45%)
  • Rep. Lou Correa (D-Calif.-46) – Win (63%-36%)
  • Rep. Carlos Curbelo (R-Fla.-26) – Loss (49%-51%)
  • Rep. Jeff Denham (R-Calif.-10) – Loss (48%-51%)
  • Rep. Vicente González (D-Texas-15) – Win (60%-38%)
  • Sen. Dean Heller (R-Nev.) – Loss (45%-50%)
  • Rep. French Hill (R-Ark.-2) – Win (52%-46%)
  • Rep. Will Hurd (R-Texas-23) – Win (49.2%-48.7%)
  • Rep. Stephanie Murphy (D-Fla.-7) – Win (57%-42%)
  • Rep. Bruce Poliquin (R-Maine-2) – Loss (46.2%-45.7%. Poliquin won a plurality on first ballot, but lost on Maine’s new ranked-choice voting system for when no candidate receives more than 50%)
  • Sen. Jon Tester (D-Mont.) – Win (49%-48%)


Our expanded political engagement on behalf of Republicans and Democrats gave ABA and our members a stronger voice in this midterm election. With your help and support, we look to build on this solid foundation as we head into the 2020 election.