Bloomberg Government subscribers get the stories like this first. Act now and gain unlimited access to everything you need to know. Learn more.
When the American Bankers Association met in Washington recently, the speakers included the A list of public officials who oversee the financial sector, including Treasury Secretary Janet Yellen and the current and former chairs of key congressional committees.
But the group’s president Rob Nichols spent extra time introducing Sen. Tim Scott, a rising star from South Carolina who was just weeks into his new role as the top Republican on the Senate Banking, Housing, and Urban Affairs Committee.
Scott’s ascension has thrust him into a leading role charting Washington’s response to the collapse of two mid-sized banks that have rattled the markets and generated calls for more federal legislation. The position also gives Scott more national visibility and draws additional scrutiny he prepares for a White House bid in 2024.
“I always argue that the position would be valuable for someone running for higher office in the event of a crisis,” said Saat Alety, a former senior legislative aide to Scott who’s now a lobbyist at Federal Hall Policy Advisers. “We just had one, and that gives you kind of the platform.”
The mild-mannered Republican is walking a political tightrope, balancing how much to cooperate with Democrats like Banking Chairman Sherrod Brown (Ohio) with the need to appeal to a Republican base hungry for a presidential nominee next year that will aggressively try to usurp Democratic control of the White House and Senate.
The same day Senate Minority Leader Mitch McConnell (R-Ky.) formally named Scott as the most senior member of the Banking Committee, Scott said his top priorities for the role included increasing credit access, avoiding “burdensome regulations” on small businesses, promoting financial literacy, and oversight.
At the Banking Committee’s first hearing Tuesday since the failure of Silicon Valley Bank and Signature Bank, Scott faulted Biden administration policy for inflation that may have upended the banks’ finances. He also blamed independent regulators and the banks’ own management.
“By all accounts, this is a classic tale of negligence, and it started with the banks themselves,” Scott said. “Without any question, that’s where the buck stops.”
Scott’s prominence in both financial and political circles is long way from his youth growing up in a working-class, single-parent, Black household in South Carolina. Struggling in school, he was helped by John Moniz, the operator of a Chick-fil-A, which was next to the movie theater where Scott worked. Scott later got a partial football scholarship to college and ran an insurance company before entering politics.
He served as statewide co-chairman of Strom Thurmond’s last Senate campaign in 1996, saying that the man who had once run for president on a segregationist platform had evolved in his views. Scott was elected to the House in 2010 and was appointed by then-Gov. Nikki Haley (R) to the Senate in 2013 following the resignation of GOP Sen. Jim DeMint.
Since then, Scott has won all of his elections with over 60% of the vote. He was first Black senator elected from the Deep South since Reconstruction and is currently the only Black Republican in the Senate.
On Capitol Hill, Scott’s biggest focus has been on financial policy, and he often invokes his impoverished childhood to promote policies for economic development.
He’s broadly credited with crafting a provision in 2017 tax code changes (Public Law 115–97) aimed at incentivizing investments in distressed areas known as “opportunity zones.”
He was also an original co-sponsor of a 2018 measure (Public Law 115-174) exempting smaller banks from several provisions of the Dodd-Frank financial regulatory law (Public Law 111-203). In the wake of the recent bank failures, a number of Democrats, including Sen. Elizabeth Warren (D-Mass.), have called for restoring those regulations.
Paul Merski, group executive vice president for congressional relations and strategy at Independent Community Bankers of America, said Scott’s membership on “killer three committees of interest” to his trade association’s community banks — Banking, Finance, and Small Business — provided a forum to advance their shared goal of reducing or preventing regulations on smaller banks.
“I think his philosophy fits pretty well with the banking sector,” Merski said. “On a scale to one to 10, working with Senator Tim Scott, I would give him an 11. He’s been extremely helpful on all our issues.”
Employees and PACs in the securities and investment sector have made up the largest share of Scott’s political fundraising over the course of his congressional career, second only to retirees, according to campaign finance watchdog OpenSecrets.
“I definitely think it colors his policies and political priorities,” said Krystle Matthews, a former South Carolina Democratic state legislator who unsuccessfully sought to unseat Scott last fall. “I think it would be naive of us to believe anything other than that.”
Spokespeople for Scott did not make him available for an interview. Ryann DuRant, Scott’s senior communications adviser, said before his promotion to ranking member the senator “earned the trust of his colleagues on both sides of the aisle, as well as his constituents” and “continually honed his expertise” from relevant congressional committees.
Brown told Bloomberg Government that his work with Scott as chairman of the Banking Committee has been “pleasant” but less fruitful than he had hoped.
“He’s got a role to play and perhaps a presidential campaign to run,” Brown said. “It may be hanging over his head as he makes decisions.”
Senate Democrats in interviews praised Scott for his ability to negotiate amicably across party lines.
“One of the most important things when you’re a United States senator I’ve seen is a simple rule: Don’t be a jerk,” said Sen. Cory Booker (D-N.J.), who counts Scott as a friend from their shared work on criminal justice and law enforcement issues. “He’s somebody that’s forged substantive friendships that allow you to do the hard work of actually creating policy.”
Scott’s new official role comes as he likely prepares a bid for president. He plans to travel soon to states with early nominating contests like Iowa and New Hampshire, and he has scheduled for next month a Charleston, S.C. meeting with key donors.
His Senate campaign at the end of last year reported $21.8 million on hand, the most of any current member of Congress. That money can be moved to a presidential campaign account, and allies have formed a super PAC, Opportunity Matters Fund, that reported $13.1 million on hand.
He also won a seat last month on the Foreign Relations Committee, expanding his portfolio to international affairs.
Scott would start with the disadvantage of not being widely known. Polling by Monmouth University and Morning Consult this month showed Scott garnering just 1 percent of the support in hypothetical matchups of the Republican primary field. Nearly half of registered voters in one Harris Poll said they had never heard of Scot or had no opinion of him.
Scott’s primetime work on banking policy could help appeal to primary voters, especially if he serves as a foil to the Biden administration or the broader effort by investors to prioritize environmental, social, and governance (ESG) factors that have become a target for the right.
Sen. Lindsey Graham (R), a fellow South Carolinian who sought the presidency in 2015, in an interview said Scott’s new position gives him added authority to talk about an issue with political salience.
“Everybody’s worried about, ‘will my bank fail?’” Graham said. “So being the ranking member on Banking, first thing out of his mouth about banking, everybody’s going to just sit there and listen.”
With assistance from Mackenzie Hawkins and Greg Giroux
To contact the reporter on this story: Zach C. Cohen in Washington at firstname.lastname@example.org