What the 2026 U.S. midterm elections could mean for financial services

With the 2026 U.S. midterm elections approaching, RSM is looking at the economic stakes and the key issues for various industries. This article is part of that series.

The outcome of the 2026 U.S. midterm elections will help shape the policy landscape facing U.S. businesses through the remainder of the decade. Changes in congressional control, oversight priorities and state-level policymaking could influence everything from taxes and funding programs to regulation, workforce issues and investment decisions. 

Here’s a look at the implications for financial services.

The top issue for financial services

Regulatory and supervisory direction will remain a central strategic issue for financial services firms. Federal banking regulators have proposed several changes to modernize the regulatory capital framework, including revisions affecting large-bank capital calculations, standardized risk weights and the surcharge applied to global systemically important banks.

The U.S. Securities and Exchange Commission, Commodity Futures Trading Commission and Consumer Financial Protection Bureau continue to revise or reconsider reporting, disclosure and lending requirements affecting investment advisers, private funds, lenders and other financial institutions. Fintech and consumer finance businesses must also manage changing federal and state requirements.

Depending on the outcome of the election, Congress could reinforce, constrain or redirect aspects of this regulatory agenda through legislation, oversight and appropriations. The timing and substance of potential future changes would depend on agency action, judicial review and the applicable rulemaking process. For financial services firms, potential regulatory changes could affect compliance costs, capital allocation, product offerings and growth strategies.   

Implications for future legislation

Control of Congress matters to financial services because lawmakers can influence the statutory framework governing the industry, conduct oversight of financial regulators and shape agency funding and priorities.

If Republicans retain control of both chambers of Congress, lawmakers could pursue additional legislation to modify regulatory requirements, expand access to capital and establish clearer statutory frameworks in areas such as digital assets. Ongoing agency efforts to revise existing requirements could also continue, although many implementation and rulemaking decisions would remain within the authority of independent and executive branch agencies.

Under a divided government, major financial services-related legislation could become more difficult to enact. In that outcome, congressional activity may instead center on oversight, appropriations, nominations and targeted provisions attached to must-pass legislation. Regulatory agencies and the courts could consequently play a larger role in determining near-term policy outcomes.

If Democrats win both chambers of Congress, Democrat-led committees could place greater emphasis on consumer and investor protection, financial stability, disclosure requirements and oversight of emerging financial products. Legislative outcomes would still depend on the size of the majorities, Senate procedures and the administration’s position.

State action will remain important under any of these scenarios. States may continue developing their own approaches to consumer protection, privacy, artificial intelligence, insurance regulation, digital assets and financial technology, increasing the possibility of divergent compliance requirements.

For business leaders, the key uncertainty is not simply whether regulation increases or decreases, but which requirements change, when they change, and whether federal and state approaches align.

Other key issues for financial services

• Interest rates, credit conditions and capital availability: Interest rates and credit availability remain key drivers of financial services activity, affecting borrowing costs, asset values, lending demand and investment returns. Federal fiscal policy and Treasury borrowing needs can also influence broader capital market conditions.
  In its August 2026 estimate, the U.S. Department of Treasury projected $628 billion of privately held net marketable borrowing for the fourth quarter of 2026, assuming an $850 billion year-end cash balance. Credit conditions remain uneven: The Federal Reserve has noted weaker debt servicing capacity among some non-investment-grade and riskier private firms, particularly those relying on floating-rate leveraged loans or private credit.

• Mergers and acquisitions, fundraising, and exit activity: The combination of financing costs, economic growth, tax policy and business confidence could influence transaction volumes and valuations. Firms should stress test business plans for differing assumptions around transaction activity, financing availability and the pace of capital deployment and realization.

One number to know

$29.6 trillion: Private funds reported this approximate amount in gross assets on Form PF as of the fourth quarter of 2025, according to the SEC, illustrating the scale of the market affected by investment adviser reporting and disclosure requirements.

(The figure covers funds reported by SEC-registered advisers subject to Form PF and therefore does not represent the entire private fund market.)

What middle market businesses should consider now

For middle market firms, changes in regulation can directly affect compliance costs, product economics, capital allocation and the ability to pursue growth initiatives. Because rulemaking can extend well beyond an election cycle, businesses that build flexibility into their decision making will be better positioned to respond as policy becomes clearer. Firms should document major compliance assumptions and identify decisions that depend on final agency action and implementation dates.

Here are some other sector-specific considerations:

• Banks should evaluate how potential capital rule changes could affect portfolio economics, lending capacity and growth plans.

• Asset managers and private fund advisers should identify pending rules or proposed rescissions that could change reporting, compliance and product structures.

• Fintech and consumer finance companies should map where state requirements could diverge from federal policy.

• Insurance companies should assess where differing state requirements could affect data governance, product design, pricing and compliance operations.