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Elections shake up House Financial Services Committee

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With the Republicans taking over the House of Representatives in Tuesday's election, the Financial Services Committee will look very different in 2011. President Obama, speaking at the White House Wednesday said he took full responsibility for the nation's reaction to his administration's policies. "No one party will be able to dictate where we go from here, and we must find common ground on issues going forward," Obama said. "I'm eager to hear good ideas, wherever they come from." Of the 42 Democratic members of the House Financial Services Committee, 13 either lost reelection bids or retired. Notably, Rep. Alan Grayson (D-Fla.) lost to Republican Daniel Webster for Florida's eighth district bid. Grayson has been outspoken against the banks in the recent foreclosure crisis, sponsoring the Pay-for-Performance Bill in April 2009 that would limit the amount of executive compensation on Wall Street, alleging Lender Processing Services committed fraud in the recent foreclosure scandal, and asking key regulators this week for additional capital requirements for banks. On the Republican side, only three of the 29 members will not be returning. Only Rep. Michael Castle (R-Del.) lost in the seat's primary. The other two Rep. J. Gresham Barrett (R-S.C) retired and Rep. Adam Putnam (R-Fla.) sought a state office. As for who will chair the committee, Rep. Spencer Bachus (R-Ala.) is in line to replace Rep. Barney Frank (D-Mass.), who won his reelection bid. Some analysts including Christopher Whalen of Institutional Risk Analytics predicted Frank would chair the Consumer Financial Protection Bureau being put together by Elizabeth Warren. Little change came to the Senate Committee on Banking, Housing and Urban Development. Chairman Christopher Dodd (D-Conn.) said he would retire after this year, leaving Sen. Tim Johnson (D-S.D.) in line to take his spot at the head of the committee. Only one other Democrat will leave the committee. Rep. Evan Bayh (D-Ind.) will retire as well as two other Republicans, Sen. Jim Bunning (R-Ky.) and Sen. Judd Gregg (R-N.H.). Sen. Robert Bennett (R-Utah) lost his primary election for his seat. After the election and the Republican's failure to overturn the Democrat's majority in the Senate, many expect a legislative gridlock over the next two years. "The division of power all but guarantees fiscal gridlock until after the Presidential election in 2012. With the Federal budget deficit at 9% of GDP, however, there was little prospect of any further large-scale fiscal stimulus anyway," according to Capital Economics. "More generally, the risk of a lurch towards protectionism is growing." Write to Jon Prior.

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