Wall Street and major financial institutions are closely watching this year’s US midterm elections, with several competitive congressional and gubernatorial races potentially influencing the future of financial regulation, cryptocurrency, credit card fees and artificial intelligence investment.
Beyond determining which party controls Congress, the elections could shape the political fortunes of influential financial industry allies and critics. The results could also determine how aggressively lawmakers investigate financial companies and regulators, while influencing state-level decisions on major technology infrastructure projects.
A Democratic victory in one or both chambers of Congress would give the party greater authority to investigate financial institutions and their regulators, according to Reuters reporting. Meanwhile, several gubernatorial contests could influence trillions of dollars in planned artificial intelligence infrastructure investment.
Here are some of the races attracting particular attention from financial institutions and investors.
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Ohio Senate race: Sherrod Brown challenges Jon Husted
Ohio’s Senate contest between Republican Senator Jon Husted and Democratic challenger Sherrod Brown has become one of the most closely watched races for the financial industry.
Brown, a longtime Wall Street critic and cryptocurrency skeptic, is seeking to return to the Senate after losing his seat in 2024. He previously served for 18 years and could regain significant influence if Democrats win control of the Senate.
With seniority based on his previous service, Brown could potentially seek another leadership position on the Senate Banking Committee, which oversees financial regulators, or secure a prominent role on the Agriculture Committee, which handles some cryptocurrency policy issues.
The cryptocurrency industry has invested heavily in opposing his return, spending more than $50 million to defeat him. The race has consequently become an important test of the industry’s growing political influence.
Recent polls have shown Brown leading by as many as five percentage points or running level with Husted. Prediction markets on Friday placed Brown’s chances of victory at 69.5%.
Kansas Senate race: Credit card fees become a political issue
Republican Senator Roger Marshall faces a competitive challenge from Democrat Adam Hamilton in Kansas, a state that has not traditionally been considered a major political battleground.
The contest has attracted attention from banks because Marshall has supported legislation to cap the transaction fees banks charge retailers for credit card payments, commonly known as swipe fees.
Financial institutions have opposed such proposals for years, arguing against restrictions that could reduce their profits. The issue has become particularly sensitive because opposition to swipe fees has attracted support across party lines.
Although Wall Street generally favours Republicans because of their preference for lighter financial regulation, Marshall’s position on credit card fees has complicated the industry’s political calculations.
A recent poll showed Hamilton narrowly ahead, while prediction markets on Friday placed Marshall’s chances of winning at 55%.
Texas Senate race: Ken Paxton faces James Talarico
The Texas Senate contest between Republican Attorney General Ken Paxton and Democratic challenger James Talarico is among the most expensive Senate races in history.
The closely contested election is also being watched as a test of whether Democrats can make significant gains in traditionally Republican territory. A Talarico victory would mark the first Democratic win in a statewide Texas election in decades.
Paxton has had a complicated relationship with Wall Street, leading investigations and legal action against banks and asset managers over investment and lending policies he described as politically motivated.
He has previously challenged financial companies over their climate and diversity policies, accusing them of pursuing what he characterised as left-leaning investment practices.
Recent polling has shown Talarico leading by between two and eight percentage points. Prediction markets on Friday placed his chances of victory at 66.8%.
Nebraska Senate race: Cryptocurrency and banking interests in focus
Republican Senator Pete Ricketts faces independent challenger Dan Osborn in another competitive Midwestern contest.
Ricketts serves on the Senate Banking Committee and has supported cryptocurrency-friendly legislation, attracting financial backing from the digital asset industry, according to Politico.
He also has connections to the financial sector through his previous position on the board of TD Ameritrade, the brokerage firm founded by his father.
Osborn, a former labour union leader, has taken a different position on credit card transaction fees, describing swipe fees as a burden on small businesses and local communities.
The contest is considered highly competitive, although prediction markets on Friday placed Ricketts’ chances of victory at 71.7%.
Gubernatorial races could determine the future of AI investment
Beyond congressional elections, investors are paying particular attention to gubernatorial contests because state and local governments have significant authority over data centre planning, construction approvals and infrastructure permits.
Growing public opposition to data centres has become a major issue during the midterm campaign. Concerns about electricity consumption, infrastructure demands and the local impact of large-scale facilities could influence how quickly new projects receive approval.
According to Beacon Policy Advisors, 10 gubernatorial elections could help determine the direction of approximately $2.5 trillion in planned investment.
Texas, Georgia and Ohio have been identified as particularly important contests because of their competitive political environments, differing candidate positions and the number of proposed projects in their states.
Strategists at investment bank Morgan Stanley have also highlighted Pennsylvania, Nevada, Wisconsin and Michigan as gubernatorial races worth monitoring.
For financial markets, the outcomes could influence the pace of data centre construction and the broader infrastructure expansion supporting the AI industry.
House Financial Services Committee races could reshape Wall Street oversight
Control of the House Financial Services Committee is another important consideration for financial institutions.
Republican Representative French Hill of Arkansas currently chairs the committee, which oversees financial regulators and plays a central role in shaping legislation affecting banks and Wall Street.
A former banker who has supported bank-friendly policies, Hill faces a competitive challenge from Democrat Chris Jones. The Democratic Congressional Campaign Committee has added his seat to its list of Republican-held districts it hopes to flip.
The cryptocurrency industry is also monitoring the contest between Democratic Representative Sean Casten of Illinois and Republican businesswoman Niki Conforti.
Casten has advocated investigations into the Trump administration’s cryptocurrency connections and supports stricter rules for the digital asset industry.
He has also reportedly considered challenging Representative Maxine Waters, currently the leading Democrat on the committee, for its chairmanship if Democrats regain control of the House.
Why Wall Street is watching the midterms
The midterm elections could influence several major areas of financial policy simultaneously, from cryptocurrency regulation and banking oversight to credit card fees and the expansion of AI infrastructure.
For banks, the results could determine whether lawmakers pursue restrictions on transaction fees and increase scrutiny of financial institutions. Cryptocurrency companies are watching for changes in congressional leadership that could affect regulatory oversight and the industry’s growing political influence.
Meanwhile, technology investors have a separate interest in gubernatorial contests, where decisions on planning and permitting could influence the scale and timing of data centre investments.
The outcome will therefore matter beyond the balance of power in Washington. For financial institutions and investors, the elections could help determine the regulatory and political environment in which some of their largest investments and commercial interests operate.
With information from Reuters.
