The giant blue wave that swept Congress this week has left Democrats in a celebratory mood. The vibe on Wall Street, however, is less upbeat as lawmakers like Sen. Elizabeth Warren (D-MA), who have expressed pointed hostility towards the financial industry, prepare to wield oversight power. This would seem to bode ill for behemoths like JPMorgan, Goldman Sachs and Morgan Stanley. But the banks can take comfort in the view of analysts and legal experts, who say that the fallout from the mid-term election is likely to amount to little more than “political theater” and public shaming—at least for now.
For Wall Street, the first signs of the new political order are already appearing. Just days after the election, CNBC reported that Senate Democrats are gearing up to investigate JPMorgan for the bank’s relationship with late sex offender Jeffrey Epstein, citing a source familiar with the matter. JPMorgan declined Fortune’s request for comment on the matter.
Before that, on the same evening that polls closed, Sen. Ron Wyden, an Oregon Democrat who is expected to chair the Senate Finance Committee, posted a simple message on X: “Subpoenas.”
It was a one-word preview of the scrutiny Wall Street could face when Democrats take control early next year.
“I think there’s going to be a tremendous amount of political theater,” Joann Needleman, head of the financial services regulatory and compliance practice at law firm Clark Hill, told Fortune.
That could mean subpoenas, investigations, hearings, and more strongly worded letters demanding answers from top executives. Among the lawmakers expected to lead that charge is Warren, who is widely expected to become the new chair of the powerful Senate Banking Committee.
“Elizabeth Warren is going to bring all of these firms in and talk about all the billions that they’ve made and all the things that they have charged consumers,” Needleman said. “The bigger banks will just be called in and be put to shame by various committees that want to inquire about them.”
Warren has already shown how aggressively she is willing to challenge the financial industry. She has previously called for criminal probes into banking execs, described the private-equity industry as legal “looting” and even written a bill that could make it easier to prosecute executives. Longtime Wall Street watchers, though, say any upcoming investigations or oversight hearings are par for the course.
“The people who were elected have mandates, and you have to expect them to follow through on those mandates,” said Mike Mayo, Wells Fargo’s head of U.S. large-cap bank research.
But that doesn’t mean all of this will result in significant disruption to how the big banks operate on a day-to-day level.
“We could certainly see tougher language, more congressional hearings, and increased scrutiny of industries … but translating that rhetoric into meaningful legislation is an entirely…
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