Mr. Frank also has a strong interest in affordable housing and his chairmanship could shift the odds in the three-year-old struggle to tighten regulation of mortgage giants Fannie Mae and Freddie Mac. The Bush administration's efforts to persuade Congress to force the companies to slash their mortgage holdings had already sputtered before the election, and Treasury Secretary Henry Paulson has been looking for possible compromises. Now almost any legislative language to rein in the two companies may be politically impossible to sell.
Fannie and Freddie shares gained 2.9% and 2%, respectively, to $61.25 and $71.23 yesterday in 4 p.m. Big Board trading.
Still, Mr. Frank is expected to push hard for the legislation to require Fannie and Freddie to use more of their resources for financing loans to low-income people. That may hurt the companies' profitability. And both parties still want to create a more powerful regulatory agency to oversee Fannie and Freddie in light of their violations of accounting rules in recent years.
Another industry that could both benefit and suffer from the Democratic takeover of the House is the auto industry. Democrats are likely to push for greater use of alternative fuels, which could hurt or help Detroit depending on how legislation is structured. The industry is sharply opposed to tougher fuel economy standards supported by Democrats. But domestic auto makers are bullish on the potential for ethanol to partly replace oil as a transportation fuel and would support efforts to build the ethanol infrastructure and production capacity.
More perilous for the industry is Democratic interest in addressing climate change by limiting carbon dioxide emissions. Automobiles are among the worst offenders, and car companies could be hurt by new taxes or regulations aimed at limiting carbon emissions.
President Bush is said to be interested in climate change as well, and he has repeatedly spoken in favor of alternative fuels, making them an area where potential exists for successful legislation.
--Kara Scannell, Brody Mullins, James R. Hagerty, Anna Wilde Mathews, Laura Meckler and Anne Marie Chaker contributed to this article.
Write to Deborah Solomon at
deborah.solomon@wsj.com and Michael M. Phillips at
michael.phillips@wsj.com