Sen. J.D. Vance — the Trump-backing former venture capitalist — is trying to lead Republicans in a new cause: cracking down on big banks.
Following a Senate campaign in which he pledged to prioritize rural America over titans of industry, the Ohio lawmaker is using a seat on the Banking Committee to flex his populist bona fides, teaming up with Democrats including Sens. Elizabeth Warren of Massachusetts and Dick Durbin of Illinois on bills that the industry’s biggest players despise — while championing legislation that protects smaller banks.
He’s taking a lead role in advancing bipartisan proposals that would penalize bank executives when their companies fail, make it harder for giant lenders to get bigger by acquiring other banks and rein in credit card fees. Along the way, he’s had some success in recruiting fellow Republicans to the cause — creating fresh headaches for big bank lobbyists, who are gearing up to fight the Vance-backed policies.
Warren, who enlisted Vance to build GOP support for a bill to claw back compensation from executives of failed banks, said he’s been “terrific to work with.”
“We have to figure out what is the actual policy of our government, and how do we need to change it to fit with a healthy small and medium regional bank ecosystem,” Vance said in an interview. “I don’t think that’s true right now.”
Vance’s approach to the most powerful financial institutions — similar to pushes he’s made to strengthen rail safety requirements and curb airline fees — is the latest example of an emerging GOP shift as a new crop of Republican politicians challenge the party’s pro-business, free-market ideology. Fueled by former President Donald Trump, it’s upending conservative politics and stirring tensions within the party about how it approaches the economy.
“There’s a broad attempt to rethink the way that Republicans govern, and Vance is clearly a leader of that,” said Matt Stoller, a progressive who serves as director of research at the American Economic Liberties Project. “He wants to rebuild the banking industry to bring it closer to Ohio, closer to local communities — and then kind of rebuild a more decentralized banking system.”
“It’s not going to be good for [JPMorgan Chase CEO] Jamie Dimon — but it’ll generally be good for most bankers, and for a lot of Americans who need banks,” Stoller added.
The March collapse of Silicon Valley Bank — and the ensuing government backstop for the deposits of its tech startup and venture capitalist clientele — created a major opening for Vance, as the episode put banking industry mismanagement at the top of Washington’s agenda.
Vance’s criticism of how SVB was run drew the attention of Warren, who approached him to help her build support on the Banking Committee — where they both serve — for her executive compensation legislation.
“The executives responsible for running their banks into the ground are sitting on millions of dollars in compensation and bonuses,” Vance said at the time. “Meanwhile, the American people are bearing the financial burden for their excessive risk-taking and gross mismanagement.”
Together, they were able to draw the support of nearly half the committee.
One of the provisions Vance pushed for in the bill was a carveout for the smallest, “community” lenders, which he sees as operating at a financial disadvantage compared with the biggest banks.
“There’s sometimes some concerns from my Republican colleagues — some concerns that I share — that our Democratic colleagues are right to be wary of the power of Wall Street but maybe wrong to collapse Wall Street in with the regional banks and community banks,” Vance told POLITICO. “We have similar instincts in a lot of this stuff, but a lot of us on the Republican side are very interested in protecting the community and regional banks.”
The work helped build pressure for a different bank executive accountability bill that the committee approved in a 21-2 bipartisan vote on June 21. Drafted and negotiated by Senate Banking Chair Sherrod Brown (D-Ohio) and Sen. Tim Scott (R-S.C.), that legislation included a clawback section that was narrower in scope than the Warren-Vance plan, covering fewer executives and types of pay than their proposal.
But Vance further put his stamp on it with an amendment that would make it harder for the largest megabanks to acquire failed lenders. Brown, a fellow populist Ohioan, said in an interview that he supported efforts like Vance’s to keep banks like JPMorgan Chase, Wells Fargo and Bank of America from getting bigger because “they have too much influence in the world.”
“He and Elizabeth Warren are starting from very different places on a lot of stuff,” said Oren Cass, executive director of the conservative policy group American Compass. “But he’s going to look at what’s going on at Silicon Valley Bank or at Norfolk Southern, and he has no prior commitment to, ‘Well, I’m sure the free market has this under control’ or, ‘Well, my responsibility here is to take the side of the corporation.’”
Last month, Vance signed on to a bill from Durbin that would try to lower credit card swipe fees — a policy that would hit banks that issue cards. Banks have long fought to fend off such legislation, which is backed by retailers.
“Vance is certainly working from his own playbook on a lot of issues,” said David French, senior vice president of government relations at the National Retail Federation, which is lobbying in support of the bill. “On this one, I think he sees a broken, anti-competitive market for swipe fees that hurts small businesses in Ohio and elsewhere.”
The proposal is triggering industrywide opposition from banks — even the small lenders that Vance says he wants to protect.
Members of the Independent Community Bankers of America told Vance their concerns with the Durbin bill during a May visit to the Hill, the group said. The ICBA, with trade groups including the American Bankers Association and the Bank Policy Institute, says the legislation could harm consumers by forcing banks to limit credit card reward programs.
“We were surprised by his support,” ICBA Executive Vice President Paul Merski said, noting opposition from Ohio bankers. “We’ll make our concerns fully known to him and his office.”
Until then, Merski said, “it’s something we’ll have to agree to disagree on.”
Zachary Warmbrodt contributed to this report.
