With the 2026 midterm elections quickly approaching, companies are gaming out what a change in power in Washington could mean for regulation, legislation and their bottom line. For financial services firms, however, one of the most immediate consequences may come not from regulators but from Capitol Hill.
Inflation, high gas prices, and the Iran war have been a drag on Republican candidates. Should Democrats win control of either the House or Senate, Washington will enter another period of divided government. For Wall Street, political gridlock can appear reassuring with fewer policy changes and a degree of predictability. But gridlock does not mean inaction.
A change in control in Congress would also mean a change in control of its powerful committees. New chairs will direct hearing agendas, launch inquiries, demand documents, call witnesses and, importantly, wield congressional subpoena power. And Congressional Democrats are already signaling where they are likely to focus.
Democratic lawmakers positioned to lead key committees have publicly discussed an extensive oversight agenda should their party regain the majority. While much of the attention has focused on investigations of the Trump administration and the president's family, those inquiries could extend well beyond government officials. Companies, executives, and investors could all find themselves drawn into congressional scrutiny.
For financial institutions, the potential exposure is particularly broad. Crypto and digital assets, lending practices, conflicts of interest and corporate relationships with the administration could all attract congressional interest.
At the same time, firms should not focus only on potential relationships with the administration. Historic targets for Democrats, such as private equity firms that invest in consumer-facing sectors like medicine and housing, are also likely to find themselves in the crosshairs.
And the challenge isn't just legal exposure. It’s reputational exposure as well.
Corporate leaders should not wait for the first committee letter, document request or subpoena to determine how prepared they are.
The time to conduct a congressional risk assessment is now. Start by asking:
- Where has the company taken positions or actions that could attract congressional attention?
- What relationships, transactions or business practices could intersect with likely areas of investigation?
- What documents and communications could become public if requested by Congress? How would those documents look on a screen in a hearing room, without any context?
- Which executives could be called to testify, and are they prepared?
- Are regulatory filings, public statements and internal communications consistent?
- Can legal, government affairs and communications operate as one cohesive team under the pressure of a fast-moving congressional inquiry?
No one knows which party will control Congress next year. What we do know is how companies can best determine where the risks lie and prepare for a potential change in committee leadership.
By Sean Neary, Co-President, Edelman Smithfield U.S. and Natalie Short, Senior Vice President, Edelman Smithfield. Together, they lead Edelman Smithfield’s hearing preparation offering.