WASHINGTON - Financial services lobbyists are carefully watching the outcome this week of House leadership races that will play a role in shaping legislation for the next two years.
The industry is supporting Rep. Steny Hoyer, D-Md., in his bid to be House majority leader, viewing him as more pro-business and moderate than his opponent, Rep. John Murtha, D-Pa. It is also supporting Rep. John Boehner to retain his post as House Republican leader against Rep. Joe Barton - a frequent banking industry foe.
The races, which are to be decided today and Friday, are crucial in the business community and beyond since both posts help determine what bills will be considered in the next Congress.
Industry lobbyists said they back Rep. Hoyer because he helped support the bankruptcy reform bill last year and has long-standing ties to the industry that date from a brief stint on the former House Banking Committee 20 years ago.
"There is a sense among the lobbying community that I think they have more relationships with Hoyer, that he's tried to work the business community a little bit harder than Murtha has, so I think there's just an added comfort level there with him," said Brian Gardner, a Washington research analyst at Keefe, Bruyette & Woods Inc.
Rep. Hoyer's support for bankruptcy reform could have a renewed significance since industry lobbyists fear Democrats will try to roll back provisions of the bill they fought for years to see enacted. The Maryland Democrat's support could stifle such an effort. However, Rep. Hoyer's backing of the measure apparently irritated House Speaker-to-be Nancy Pelosi, lobbyists said.
"It really kind of ticked off the incoming Speaker," said a lobbyist who spoke on condition of anonymity. "She thought that he was inappropriately aligning himself with the credit card industry ... [and that] the bankruptcy reform issues were kind of anti-consumer."
Rep. Pelosi has openly backed Rep. Murtha, a personal friend, but House Democrats appear divided. Rep. Barney Frank, D-Mass., who is expected to be chairman of the House Financial Services Committee next year, has backed Rep. Hoyer, which many lobbyists took as a signal.
"A vote for Hoyer from the incoming chairman is a pretty sound sign that he's going to be somebody that the industry is going to be favorable towards," the lobbyist said.
Rep. Maxine Waters, D-Calif., who is expected to be chairman of the panel's housing subcommittee, also backs Rep. Hoyer, but Rep. Paul Kanjorski, the committee's No. 2 Democrat and a fellow Pennsylvanian, and Rep. Michael Capuano, D-Mass., another panel member, support Rep. Murtha.
Though Washington pundits view Rep. Hoyer as the favorite, the race could go either way.
"These things are notoriously impossible to handicap," said another financial services lobbyist.
Even if Rep. Murtha wins, the damage to the industry is likely to be minimal, observers said. Larry Sabato, the director of the University of Virginia's Center for Politics, said he doubts the Pennsylvania Democrat would obstruct Rep. Frank or the industry.
"With Barney Frank as chairman of Financial Services, of course there are not many people who are going to try to overrule him ... it's a little too early to become this panicked," he said.
But lobbyists have also focused on the Republican race, which is to be decided Friday.
Rep. Boehner, an Ohioan, is facing two challengers - Rep. Barton, a Texan and the outgoing chairman of the Energy and Commerce Committee, who has routinely been at odds with the Financial Services Committee, and Rep. Mike Pence of Indiana, the head of the Republican Study Committee.
Many in the industry supported Rep. Boehner in his bid this year for the majority leadership, saying he played a crucial role in helping to develop the Gramm-Leach-Bliley Act of 1999.
"There's a comfort level because Mr. Boehner's been around so long they kind of know him and they just feel a little bit more comfortable with him," said Keefe Bruyette's Mr. Gardner.
Reps. Spencer Bachus, R-Ala., and Richard Baker, R-La., who are contending to be the Financial Services Committee's top Republican, have said they support Rep. Boehner.
But other Financial Services Committee members, who also serve on the Republican Study Committee have said they support Rep. Pence, including Reps. Jeb Hensarling, R-Tex., who is managing Rep. Pence's campaign, Tom Feeney, R-Fla., and Scott Garrett, R-N.J.
Some Capitol Hill aides sympathetic to Rep. Pence said he would be good for the industry.
"There hasn't really been a reason for the financial services world to deal with Pence on banking issues, but as the leader of the Republican Study Committee he's been very supportive of banking issues," said a Republican congressional staff member. "He and Hensarling, who sponsored the regulatory relief bill, are like-minded."
The industry has been critical of Rep. Barton for working too closely with Rep. John Dingell, D-Mich., who is expected to be chairman of the Energy and Commerce Committee next year. Both lawmakers have shown a propensity to try to legislate on financial services issues, observers said. For example, under Rep. Barton's chairmanship, the Energy and Commerce Committee passed a data security bill this year that conflicted with legislation approved by the House Financial Services panel. The commerce committee's bill was opposed by the industry because it would have let state regulators and the Federal Trade Commission enforce new security standards on banks.
Rep. Barton "teamed up with Dingell on quite a few things," Mr. Gardner said. "He was pretty aggressive on data privacy legislation, and so I think there is a sense that he's a little more populist than Mr. Boehner is. I think there are some in the banking community who see Mr. Boehner as a more traditional Republican, with Mr. Barton being … a bit more populist."
