It’s not often a Republican member of the Senate Banking Committee attacks the home of the financial services industry. Sen. JD Vance did so Wednesday night at the Republican National Convention as he accepted his party’s nomination for vice president.
“President Trump’s vision is so simple and yet so powerful,” Vance, R-Ohio, said to the GOP delegates and faithful at the Fiserv Forum in Milwaukee. “We’re done, ladies and gentlemen, catering to Wall Street. We’ll commit to the working man.”
Vance also placed part of the blame for the rising cost of housing on large financial institutions.
“Wall Street barons crashed the economy and American builders went out of business,” Vance said.
It’s not just Vance’s rhetoric that comes in a different key from the traditional, mostly supportive Republican posture toward financial firms, as he has teamed with Democrats on some bills in the year-and-a-half he has been in the Senate. He backed a bill by Sen. Elizabeth Warren, D-Mass., that would require federal regulators to claw back up to three years of compensation earned by executives, board members, controlling shareholders and other officials at failed banks.
Vance also is a co-sponsor of legislation by Sen. Richard J. Durbin, D-Ill., that would prevent large credit card issuers from restricting access to electronic payment networks by smaller issuers.
Vance has expressed skepticism about big mergers and acquisitions through legislation he has co-sponsored, including a bill by Sen. Sheldon Whitehouse, D-R.I., that would eliminate tax deferrals for shareholders who receive stock in mergers of corporations with gross annual receipts of more than $500 million.
“JD Vance is not your father’s or grandfather’s Republican,” said Milan Dalal, managing partner at Tiger Hill Partners, a government relations consulting firm. “He is a populist who more closely aligns on economic policy with Bernie Sanders than Mitt Romney.”
Vance has used his position on the Senate Banking Committee to promote GOP policies meant to appeal to working-class voters. He sponsored a bill that would prohibit the Chinese government from accessing U.S. capital markets if China violates international laws on finance, trade and commerce.
In an exchange with Federal Reserve Chair Jerome Powell in a recent Senate Banking hearing, Vance tied illegal immigration to tight labor and housing markets that are spurring inflation.
“That was the latest example of him discussing a social issue, especially a hot-button issue, in the context of financial services policy,” said Michael Canning, principal at The LXR Group, a public policy firm specializing in financial services. “His view is representative of where the party is going rather than where it’s been.”
In another break with past Republican orthodoxy, Vance emphasized that former President Donald Trump, the GOP’s presidential nominee, is “not in the pocket of big business” but “answers to the working man, union and non-union alike.”
The Republican Party is changing through Vance, Dalal said.
“Unlike the Republican Party establishment, he is solicitous of the labor movement, supportive of a higher minimum wage, in favor of competition to reduce credit card fees, and for curbs on executive compensation,” said Dalal, a former Democratic staff director for a Senate Banking subcommittee.
Gaining experience in private markets
Although Vance emphasizes his hardscrabble upbringing in Middletown, Ohio, he began his career in venture capital after graduating from Yale Law School. His focus on technology startup firms gave him experience in private securities.
“I would assess him as a Silicon Valley guy who’s more comfortable with private markets than public markets,” Canning said. “That’s the landscape Vance knows very well and is very enthusiastic about.”
That would put him in a different place from Trump, who is more familiar with traditional capital markets, Canning said. It also would position Vance to promote cryptocurrency and unregistered stock offerings, areas where Securities and Exchange Commission Chair Gary Gensler has expressed deep skepticism and sought more regulation.
“He has emerged as an advocate for the cryptocurrency industry,” Dalal said, adding that Vance is working on cryptocurrency legislation.
If Trump and Vance are elected, look for Vance to try to bring change in the financial services regulatory agenda, Canning said.
“If that’s the case, and he was able to influence nominees, you will see a 180-degree difference from Gensler at the SEC,” he said.
Heated exchange with SEC’s Gensler
Vance’s antipathy toward Gensler came out during a Senate Banking hearing last September. Vance aggressively questioned Gensler, leading to a heated exchange.
“In 2016, you were the CFO of Hillary Clinton’s failed presidential campaign. Is that correct?” Vance started out. Things went downhill from there.
Vance criticized SEC staff who had been involved in actions targeting Trump before they joined the SEC. They included SEC Enforcement Director Gubir Grewal, a former New Jersey attorney general, and Megan Barbero, an SEC policy aide who had worked as the House deputy general counsel.
Vance accused Gensler of hiring “a lot of people who seem to have a vendetta against the former president” and launching a politically motivated investigation of Trump’s social media company.
Gensler defended the probe. “We follow the facts and the law wherever they are,” he said.
The problem was that the SEC was “using its enforcement powers to silence the chief political rival of the …current president,” Vance said.
Gensler grew tired of Vance’s trying to force him into “yes” or “no” answers.
“Sir, I don’t speak yes or no. I don’t, sir,” Gensler said. “I’m going to answer the question.”
Vance ended the exchange with a threat.
“But maybe I can appeal to your sense of self-interest. If you guys use the SEC in such a politically motivated way, eventually you’re going to be out of power. And I have to say, Chairman Gensler, turnabout is fair play,” Vance said.
That kind of pugnaciousness may have increased Vance’s appeal as running mate for Trump.
Adding Vance to the ticket could help Trump speak to Main Street voters despite his Yale and venture capital experience.
“He’s not of Washington,” Canning said. “He has the establishment pedigree, the outsider pedigree and the innovation pedigree, all informed with views on social policy that line up closely with Trump’s.”
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