Reuters reported from Washington on November 2nd – Wall Street and financial market participants are paying attention to this year's mid-term elections in the United States, not just to see which political party will control Congress.
A handful of highly competitive electoral campaigns may determine the fates of some of the finance industry's largest political allies and rivals, and will help shape policies related to cryptocurrencies, credit cards, financial regulation, and the boom in artificial intelligence investments.
Its impact is not limited to Washington's legislative policies.
Reuters previously reported that if the Democrats win control of one or both chambers of Congress, they will gain a powerful tool to investigate a range of financial companies and their regulatory agencies. Meanwhile, several gubernatorial elections may determine the direction of trillions of dollars in investments in artificial intelligence infrastructure.
The following is the midterm election campaign that analysts and industry executives say financial companies and investors are closely watching.
Ohio Senate Race – Senator Jon Hesterd vs. Sherrod Brown
Cherrod Brown, a Democrat who has long criticized Wall Street and held a skeptical attitude towards cryptocurrencies, is seeking to return to the Senate after losing his seat in 2024. This time, he is facing Republican Senator Jon Hesterd. Hesterd took over his seat after former Ohio Republican Senator JD Vance became Vice President.
Cryptocurrency groups have invested over $50 million in an attempt to defeat Brown, making this electoral campaign one of the most costly and highly watched tests of political influence in the industry.
Brown previously served in the Senate for 18 years. If the Democrats win control of the Senate and grant Brown seniority based on his past tenure, he may have the opportunity to once again lead the Senate Banking Committee, which is responsible for overseeing financial regulatory agencies, or to hold an important role in the Agriculture Committee, which deals with some crypto policy issues. This would put him in a key position to oversee these areas.
Recent polls show that Brown leads by at most 5 percentage points, or may be tied with his opponent. On Friday, the betting market priced Brown's victory at 69.5%.
Kansas Senate Race – Senator Roger Marshall vs. Adam Hamilton
Although Kansas has not traditionally been a political battleground, the political climate has clearly shifted in favor of the Democratic Party to such an extent that Republican Senator Roger Marshall is now in a stalemate with Democratic challenger Adam Hamilton.
Wall Street tends to lean more towards the Republican Party, as the latter often supports looser regulations and law enforcement. However, Marshall has always been one of the main advocates for legislation to set a cap on "card swipe fees," which are the charges that banks impose on retailers for credit card transactions.
For many years, banks have opposed such cap measures as they may damage their profits; moreover, they are increasingly concerned that this issue is one of the few that can unite both Democrats and Republicans.
A recent poll shows Hamilton leading by a narrow margin. On Friday, the betting market priced Marshall's win at 55%.
Texas Senate Race – James Taralico vs. Ken Paxton
This is one of the most expensive Senate campaigns in history. In this populous state with a conservative majority, the fierce competition between Ken Paxton, the Republican Attorney General of Texas, and Democrat James Tarico is widely seen as a test of whether Democrats can make a breakthrough in traditionally Republican territory. If Tarico wins, it would be the first time in decades that Democrats have won a statewide election in Texas.
Meanwhile, Paxton's own relationship with Wall Street has been tumultuous. He has criticized several banks and asset management companies for implementing what he viewed as "woke" left-leaning lending and investment policies. Paxton led joint investigations by multiple states into the practices of several Wall Street firms regarding climate and diversity policies, and in some cases, he filed lawsuits.
Recent polls show that Tarrico leads by 2 to 8 percentage points. On Friday, the betting market priced Tarrico's victory at 66.8%.
Nebraska Senate Race – Senator Pete Ricketts vs. Dan Osborne
In another closely contested midwestern race, Republican Senator Pete Rikets is facing a challenge from independent candidate Dan Osborne. Rikets is a member of the Senate Banking Committee and has previously supported legislation favorable to cryptocurrencies. Polit Token Issuance reports that the crypto industry has invested funds in his campaign.
Ricketts is also associated with the financial industry; he once served on the board of directors of TD Ameritrade, a company founded by his father. Meanwhile, former union leader Osborne has also criticized credit card transaction fees, calling them a "scam" that imposes unfair costs on small businesses and communities.
Recent polls indicate that the outcome of this election is uncertain. On Friday, the betting market priced a win for Ricketts at 71.7%.
Governor elections that may affect the expenditure plan for AI
The growing public opposition to data centers has become a trigger point in this mid-term election; if the Democrats perform strongly, it may hinder the construction and expansion that are related to driving up the stock market.
Since state and local governments have regulatory authority over data center planning and licensing, investors will be paying close attention to state-level elections. According to Beacon Policy Advisors, the 10 gubernatorial elections next week will determine the direction of investments planned to total 2.5 trillion dollars.
Among them, Beacon specifically points out that Texas, Georgia, and Ohio have the most competitive gubernatorial elections. The candidates in these states have the greatest differences in stance on relevant issues and also have the largest reserves of ongoing projects. Strategists at investment bank Morgan Stanley have listed the gubernatorial elections in these states, as well as those in Pennsylvania, Nevada, Wisconsin, and Michigan, as worth paying attention to.
House Financial Services Committee member-related campaign
U.S. Representative French Hill, a Republican from Arkansas and former banker, currently serves as the chairman of the House Financial Services Committee. This committee is responsible for overseeing financial regulatory agencies and plays a leading role in Wall Street policy discussions. Hill, who supports policies more favorable to banks, is engaged in fierce competition with Democrat Chris Jones. The Democratic National Committee's Congressional Campaign Committee has recently listed Hill's district among those it hopes to turn around from Republican control.
Another election race that has attracted attention from the crypto industry is the competition between Sean Casten, a Democratic representative from Illinois, and Nikki Conforti, a Republican businesswoman. Casten has consistently advocated for an investigation into the relationship between the Trump administration and the crypto industry and supports stricter crypto regulations. Punchbowl News reported last month that if Democrats win the House of Representatives, Casten had considered challenging Maxine Waters, the current Democratic chairperson of the committee, for the position of committee chair.
(Reporter: Pete Schroeder; Lewis Krauskopf, Nolan D, McCaskill and Andy Sullivan provide supplementary reports; Michelle Price and Alistair Bell handle editing)
