6 candidates to chair banking panel (if GOP keeps House)

WASHINGTON — Which party controls the House next year is still uncertain, but this much is clear: Someone other than Texas Republican Jeb Hensarling will hold the gavel on the Financial Services Committee.

Hensarling is not running for reelection. Should the Democrats take the House in midterm elections, his likely successor is Rep. Maxine Waters, D-Calif., the panel’s current ranking member. But if the GOP holds on, a number of Republicans on the committee have put their names in the running to take the post, while some others are said to be contenders.

Whoever takes over the committee will play a critical role in setting the congressional agenda for Dodd-Frank reform, as well as regulatory policy for financial technology and the use of consumer data.

Observers point to Rep. Patrick McHenry, R-N.C. — now the panel’s vice chairman — as the most likely GOP successor to Hensarling. But McHenry may be considered to climb the GOP leadership ranks, which could open the door to other members being considered.

The committee last year shepherded the Financial Choice Act, Hensarling’s proposed overhaul of the Dodd-Frank Wall Street reforms, through the House. But that bill attracted insufficient Senate support. Hensarling sounded open in recent comments to passing a more modest reform package that originated in the Senate, but it is unclear if other Republicans on the panel will go along or continue to fight for a repeal of Obama-era regulations.

The Senate bill, sponsored by Banking Committee Chairman Mike Crapo, is expected by many to be enacted before the midterm elections. That would preempt any further complications in passing regulatory relief that would arise from the Democrats seizing power in the House in November.

“The most likely scenario is the [Democrats] take over the House and [Rep. Maxine] Waters is chair,” said Aaron Klein, economic studies policy director at the Brookings Institution. “Should the [Republicans] maintain control of the House, a less than 50% proposition at the moment, then it’s likely [Rep. Patrick] McHenry unless he enters and wins a spot in leadership.”

So far, Reps. Blaine Luetkemeyer, R-Mo., Bill Huizenga, R-Mich., and Frank Lucas, R-Okla., have publicly acknowledged their interest in taking Hensarling’s post.

Industry experts have also floated Rep. Sean Duffy, R-Wis., as a possible candidate. And Rep. Ann Wagner, R-Mo., could be in the running, if Republicans hold the House, given her leadership in pushing the Trump’s administration to kill the Department of Labor’s fiduciary standard for investment advisers.

Here is a rundown of possible GOP candidates to lead the Financial Services Committee in the new term:

McHenry is seen by many as the front-runner to succeed Hensarling. He currently holds the position as vice chair of the committee and has the support of at least two subcommittee chairmen.

Under McHenry’s leadership, the committee is likely to look more closely at measures dealing with fintech policy. He has previously backed legislation that would give fintech companies more flexibility to enable them to go to market sooner with their products. One idea he supports is creating “regulatory sandboxes” for fintech firms.

McHenry has also been a constant critic of the Consumer Financial Protection Bureau. He has called the CFPB’s “Project Catalyst” program — intended to encourage collaboration with startups, nonprofits and banks to test new products that foster innovation — a “failure.”

But McHenry, who is also the House Chief Deputy Whip, could be in line for a House leadership role when House Speaker Paul Ryan steps down at the end of his term. McHenry took over the responsibilities of House Majority Whip Steve Scalise, R-La., while he was recovering from injuries sustained last year from the congressional baseball shooting last year.

McHenry told reporters last week that he would make his decision on whether to pursue a House leadership role after the 2018 midterms.

Luetkemeyer, who chairs the financial institutions and consumer credit subcommittee, said last week at an American Bankers Association conference that he was “actively pursuing” the position as chairman of the full committee.

“I hope to be the next chair of the Financial Services Committee,” Luetkemeyer said. “It would be a great honor to do that.”

Luetkemeyer has advocated for the lower chamber to have more input in the regulatory relief bill passed by the Senate to ease some of the Dodd-Frank Act regulations on community banks. He was able to get a bill passed through the House with 59 Democratic votes that would eliminate the dollar threshold for which banks are subject to enhanced regulatory scrutiny by the Federal Reserve.

That provision would have faced a steeper hurdle in the Senate, which was only able to raise the threshold from $50 billion to $250 billion in its deregulation bill, despite Republicans’ desire to eliminate the threshold entirely.

A Luetkemeyer chairmanship could also see more rollbacks of regulatory guidance. In November he called on bank regulators to draw up a list of guidance going back 20 years to determine whether it should be submitted under the Congressional Review Act.