The Odd Couple
The House Financial Services
Committee leadership will change this year. While the
personalities are similar, the politics may not be.
I banned the 11 o’clock news from my bedroom for the
last couple of months.In the presidential battleground state of
Virginia, where I live, every television ad was political.
Obama ads, Romney ads, SuperPAC ads, Senate race ads—and
on and on.
Forget that I’m a lobbyist. Forget that politics is my
profession as well as my wife’s. And forget that the
future of the Republic is at stake. I insisted she turn the
damn news off. How bad was it? “Honey Boo Boo,”
controversial child star of the TLC reality television show
Tiaras,” has become more interesting to me than
those political ads.
So the big election is here. I don’t think withdrawal
is going to be too difficult for me. In this issue, General
Counsel Scott Sinder presents an excellent documentation of the
numerical challenges that President Barack Obama and Congress
will face regardless of the election results. They are
Sinder focuses on fiscal problems and implications for
healthcare in particular. I will focus here on the certain,
fascinating changes that are coming to the leadership of the
House Financial Services Committee. The current chairman is
Rep. Spencer Bachus, R-Ala., and the ranking Democrat is Rep.
Barney Frank of Massachusetts. Bachus is stepping down as
chairman, though he will remain on the committee. Frank is
Almost certainly, the next chairman (assuming continued GOP
control of the House, which I do) will be Rep. Jeb Hensarling,
R-Texas, while the ranking Democrat will be Rep. Maxine Waters
of California. Google either of them and you’ll see the
word firebrand used quite a
bit. Stylistically and politically, they are polar
Bachus and Hensarling are friends, and their voting record
is almost identical. But Bachus is mellow and low-key, whereas
Hensarling is ideologically intense and more willing to mix it
up. Frank and Waters have voting records that are on the far
left of the political spectrum, but Frank has shown remarkable
flexibility on a number of financial services issues, whereas
Waters has not. (In her defense, she and her staff were quite
helpful in the five-year reauthorization of the federal flood
insurance program. Let’s hope that will translate.)
If Hensarling had his way, Congress would flat-out repeal
the Dodd-Frank Act, but that’s not likely. In the absence
of repeal, Hensarling will lead the intellectual charge in
gutting some of its most egregious provisions, specifically the
frightening development of the Consumer Financial Protection
Bureau (CFPB). The insurance industry was excluded from the
statutory creation of the CFPB, but everyone in our sector
rightly fears mission creep, and any bank-owned Council member
firm can testify to the Spitzer-on-steroids concerns about the
Insurers, too, are very concerned about the
“systemically significant” provisions of Dodd-Frank
that threaten a new layer of Federal Reserve regulation heaped
on top of state-by-state regulation. Hensarling will be an ally
in those battles.
You can count on Congresswoman Waters to just as forcefully
fight back, particularly on any consumer protection issue.
However, even many Democrats don’t like to see the CFPB
insulated from congressional oversight or budgetary approval.
Hensarling might prevail on legislation that would alter the
structure of the bureau and create accountability to
Anna Palmer of Politico
recently wrote about the dilemma: “For Waters, who has
gotten into dustups with fellow Democrats at times, the issue
is not that her policy positions clash with the party, but
whether she can take Frank’s place, or at least pick up
some of the slack, as the chief defender of Democrats’
policies while also keeping members unified behind party
Meanwhile, the federal Terrorism Risk Insurance Act is set
to expire at the end of 2014. Hensarling has voted against the
act in the past, worried that it unduly extends the contingent
liabilities of the federal government. This has the industry
nervous, especially as the ranking Republican on the Senate
Banking Committee, Richard Shelby of Alabama, has expressed
similar concerns in the past.The industry will have to
aggressively make the case that the recoupment provisions of
the law mean that the reinsurance backstop has no negative
ultimate impact on federal spending. It will be a big lift.
Hensarling and Waters are going to be quite the odd couple.
Go-along, get-along congressional comity in the Financial
Services Committee in 2013 is highly unlikely.
Wood is The Council’s senior vice president of