Washington —Senate Democrats are preparing to investigate JPMorgan Chase’s past banking relationship with Jeffrey Epstein once they take control of Congress in January, CNBC reported on Thursday. The planned probe is the clearest early sign of how the new majority intends to deal with Wall Street: through hearings, subpoenas and public testimony, rather than through new laws that President Donald Trump could veto.

Reuters reported the same day that banks are bracing for tighter congressional oversight after Democrats swept Tuesday’s midterm elections. For investors, the more useful question is how much of that scrutiny turns into changes in the rules banks operate under, and how much stays at the level of uncomfortable headlines and executive appearances on Capitol Hill.

What would the JPMorgan probe examine?

According to CNBC, which cited an unnamed source familiar with the panel’s thinking, Democratic staff on the Senate Finance Committee intend to focus on how senior JPMorgan executives handled Epstein as a client, and in particular on decisions made by Mary Callahan Erdoes, chief executive of the bank’s asset and wealth management division. The committee is likely to be chaired from January by Sen. Ron Wyden of Oregon, currently its ranking Democrat, who has made clear he intends to use the subpoena powers that committee majorities hold, CNBC reported.

JPMorgan declined to comment to CNBC. The bank has previously said it regrets any association with Epstein but did not assist him in committing crimes, according to CNBC.

Much of the factual record is already public. CNBC reported that Erdoes said in a 2023 deposition that she knew as early as 2006 of accusations that Epstein paid cash to have underage girls brought to his home, and that Epstein had been a client of the bank since 1998. According to CNBC, chief executive Jamie Dimon said in his own 2023 deposition that Erdoes had the authority to drop Epstein as a client, a step she did not take until 2013. CNBC also reported that JPMorgan has blamed former investment banking chief Jes Staley, who has denied knowing about Epstein’s crimes.

The financial exposure has largely been settled. In 2023, JPMorgan agreed to a $290 million settlement with Epstein’s victims without admitting wrongdoing, and to pay $75 million to resolve a separate lawsuit brought by the U.S. Virgin Islands, CNBC reported. What a Senate investigation adds is the prospect of compelled documents and testimony from sitting executives, and a renewed focus on anti-money-laundering compliance. In August, Wyden released a report accusing senior officials at several banks of delaying reports of Epstein’s suspicious financial activity to the government, likely in breach of federal anti-money-laundering law, according to CNBC’s account of a statement from his office. CNBC said the report named officials at JPMorgan and included details of suspicious-activity reporting by Deutsche Bank and of transfers through accounts at Bank of America.

The House is moving in the same direction. Rep. Robert Garcia of California, who is poised to chair the Oversight Committee, was sued for defamation on Wednesday by former Apollo Global Management chief executive Leon Black over comments about Black’s links to Epstein, CNBC reported. According to CNBC, Black had sued the committee in September to block its subpoenas.

Why is oversight likelier than new legislation?

Control of both chambers gives Democrats the gavels, the committee agendas and the power to compel testimony. It does not give them the White House. Trump keeps his veto over any bill for the rest of his term, and a Financial Times piece published on Friday argued that the change in Congress will have little effect on policymaking for the remainder of that term.

Crypto offers a preview of how this is likely to work. CNBC reported that the sweep pushes the Clarity Act, the industry’s market-structure bill, onto the back burner, with Sherrod Brown returning to the Senate and Elizabeth Warren keeping significant influence over financial policy. TD Cowen’s Washington analyst Jaret Seiberg wrote in a note cited by CNBC that he had not expected the bill to advance over the next two years and was now more confident in that view, and that Democrats would investigate Trump’s crypto dealings, including World Liberty Financial.

The same CNBC report pointed to the limits of a congressional shift: financial regulators can still move policy forward through rulemaking, without new legislation. That logic is likely to apply to banking too. Agencies led by administration appointees write most prudential rules. A Democratic Congress can call those officials to testify, press them in public and slow nominations, but it cannot easily reverse their rules while Trump holds the veto.

That points to a specific kind of risk for large banks. Policy is unlikely to change abruptly. The more likely costs are management time spent on investigations, legal and reputational exposure from testimony, and greater pressure on supervisors to act on compliance failures that have been aired publicly.

What did markets price, and what comes next?

Markets have not yet given a clean read on the banking sector. The S&P 500 closed Thursday at 7,353.73, down 4.36 percent, and the Nasdaq Composite fell 5.52 percent to 24,315.00, according to delayed market data. The Cboe Volatility Index ended at 28.18, up from 16.61. The Guardian attributed the selloff largely to investor expectations that the artificial intelligence industry will face tougher regulation after the election, and reported that Goldman Sachs shares fell 3.7 percent. With the whole market falling, it is hard to isolate any repricing of bank shares on regulatory grounds.

Treasury yields moved the other way. The 10-year Treasury yield fell about 6 basis points on Thursday to 4.837 percent, and the 5-year yield fell about 8 basis points to 4.608 percent. Both had already declined on Wednesday: the 10-year yield stood at 4.946 percent in Tuesday afternoon trading, before results came in, and closed Wednesday at 4.894 percent, according to market data.

Several signals will show how far the new majority intends to go:

  • Committee chair assignments in January, including confirmation of Wyden at Senate Finance and Garcia at House Oversight.
  • Whether the Finance Committee formally announces the JPMorgan inquiry and issues subpoenas for documents or testimony.
  • How the Senate Banking Committee and the House Financial Services Committee set their early hearing agendas, and whether they call bank regulators to testify.
  • The final Senate margin, including the Mississippi race, where CNBC reported on Thursday that Democrat Scott Colom narrowly led Sen. Cindy Hyde-Smith and that no final result was expected before next week. The margin will shape how easily Democrats can block nominees.

For now, the evidence points to a Congress that will investigate more than it legislates. For banks, that means more public scrutiny but no immediate change to the rules they operate under.