WASHINGTON — Rep. Andy Barr, R-Ky., sees two distinct factions within his caucus on the House Financial Services Committee — the Wall Street Republicans and the populist insurgent wing. And he has a plan — a "vision" — to bring them together.
"Neither wing I think has it completely right," Barr said in an interview with American Banker on Monday. "In every case, on every policy matter, I feel like it is the job of the next chairman, and the next Congress, to make sure that we make the case that free-market capitalism is what made America great in the first place."
Barr is one of four contenders to lead the committee's Republican caucus in the 119th Congress, following the retirement of Chair Patrick McHenry, R-N.C., after his current term. Barr is running against Rep. French Hill, R-Ark., Rep. Bill Huizenga, R-Mich., and Rep. Frank Lucas, R-Okla., for the top job. American Banker will run interviews with other contenders throughout the week.
Barr said his experience on the committee — having served on or chaired most of the subcommittees in his tenure — gives him a unique vantage point to identify important priorities across the committee's jurisdiction and move legislation over the finish line.
Barr has been an active and vocal critic of many different aspects of the Biden administration's approach to financial regulation, having called on
"What's important for being the chairman of the full committee is having legislative accomplishments in all of the areas of the committee," Barr said. "And I feel like I have that."
What follows is a transcript of a conversation between American Banker and Andy Barr about his pitch to become the next top Republican on the committee. The transcript is edited for length and clarity.
American Banker: What do you think makes you stand out as the right person for this job?
Barr: All of the candidates, all of my colleagues who are running, have competency and aptitude and experience to do the job and to do it well. I think we all have different areas of expertise, but what sets me apart in some respects is that serving as chairman of the financial institutions and monetary policy subcommittee, which is a subcommittee with very significant jurisdiction, we've been able to achieve a lot in the short time I've served as chairman.
I've also served as ranking member of the oversight subcommittee and chairman of the old monetary policy and national security subcommittee. The jurisdictions have changed a little bit, but that gives me experience in what is now four different subcommittees as the leader of those subcommittees.
Further elaborating on the point: What's important for being the chairman of the full committee is having legislative accomplishments in all of the areas of the committee. And I feel like I have that — whether it's leading in the housing subcommittee on the Housing Plus Act, whether it's leading on the Republicans' position on outbound investment in China in the national security subcommittee, the extensive list of work on banking and monetary policy in my current subcommittee, and even in the capital markets subcommittee — which is the only subcommittee I've not served on because you're not allowed to serve on that and FI at the same time — we've been very active on [the] Volcker [Rule], on leveraged lending, [collateralized loan obligations], securitization, the impact of Basel III on securitization and pushing back on ESG.
The digital assets space, where I really plug into that, is making sure that we provide regulatory certainty for bank custody of digital assets. I have an expertise in each of these areas. I think that's one unique piece of my record.
The other thing is vision: I have a vision for the committee. My viewpoint is that I think this committee is uniquely positioned not just to be a defender of free-market capitalism, which the committee has always been and always should be, but to be a constructive voice within the Republican Party and within the center right of our country. That free-market capitalism is America First.
We have to acknowledge that there are two wings of our movement, not just the party, but the center-right movement in this country politically. You have kind of an incumbent legacy wing, which is the Wall Street/Chamber of Commerce/free-trade wing, and you have an ascendant populist/America First wing. Neither wing I think has it completely right. In every case, on every policy matter, I feel like it is the job of the next chairman, and the next Congress, to make sure that we make the case that free-market capitalism is what made America great in the first place. And that everything we do should be in service of the idea that uniting these two wings under the banner of free-market capitalism is the way to achieve lasting durable political victories in the years to come.
AB: What kind of policies do you think would accomplish that goal of uniting the America First wing and the Chamber of Commerce wing, as you called them?
Barr: The populist wing is very distrustful of Wall Street. It's very distrustful of Wall Street banks, of large banks and large anything. Populists don't like that. I have an appreciation for U.S. global banks for a variety of reasons because I see how important they are, for example, in achieving our national security objectives, achieving the dollar's dominance and serving our multinationals. There's so much … they are essential for U.S. global competitiveness.
But when you have this distrust, one of my jobs is to communicate to the America First group why large [global systemically important banks[ actually promote America First. But also be a tireless advocate for the community banks, which are trusted by that group. They know the banker, that banker goes to church with them, their sons are on the Little League team together, their daughters are in Girl Scouts together because they support the local Chamber of Commerce dinner.
AB: So when you're looking at specific policy areas, what does that look like? Are you talking about ESG? Are you talking about Basel?
Barr: ESG is important in trying to keep this America First group. One of the reasons why this America First group distrusts Wall Street is because they've seen Wall Street move into politics in ways they don't like. They want banks to be banks. They don't want banks to be in the business of politicizing capital and credit allocation to the detriment of Main Street jobs.
So protecting Wall Street from itself, protecting Wall Street's reputation, to that segment of the American electorate it's really, really important and saying, "Look, you serve a very important function in promoting America First and American competitiveness, do that and do well, [and] stay out of this ESG business which not only jeopardizes the integrity of your mission but also threatens your reputation with a big chunk of America."
But what is Wall Street and GSIBs banks' No. 1 concern right now? It's Basel III endgame. So while they may not like what I'm doing with ESG, they certainly like what I'm doing to protect their competitiveness globally. And my job is to explain to American First why I'm fighting against excessive capital requirements on big banks. It's not because I'm trying to be a shill or protect big banks — it's because if Basel III endgame goes into place, guess what? Access to affordable mortgages dries up, especially with high interest rates. You know, these America First voters need access to affordable lending. Right? And that goes away with Basel.
AB: Has that been an easy message to tell the America First people? Is that something you've gotten pushback over?
Barr: What's been successful, because it's true, in terms of explaining Basel III endgame, which nobody except banking lawyers actually understand — well, maybe you and me because we're in that policy, and maybe the [Federal Reserve] — when you describe the actual impact on end users of banking services and products.
That's when the average American family business or household starts to say, wait, I don't know much about the details of that regulation, but I don't like it. That means I won't be able to afford a mortgage, it means I can't have access to a mortgage, it means I can't have access to a credit card anymore. It means I'm not going to be able to refinance my tractor. So that's why that marketing campaign has connected with the American people, because it's not focused on banks. It's focused on the people who depend on banking products and services.
AB: You alluded to this a little bit in talking about your work, but what have you done so far on the HFSC that you're proud of?
Barr: Back to S.2155, working under Chairman [Jeb] Hensarling, starting with the Financial Choice Act, that was our kind of … you know, putting our flag in the ground, which was our most aspirational legislation that we passed out of the House. Obviously couldn't pass a filibuster-proof Senate, but it was a way to get the conversation going.
There were two or three bills in particular that were my bills that were made part of that. One was the Portfolio Lending and Mortgage Access Act, which promoted portfolio lending as a way to more responsibly expand mortgage credit. Another was a regulatory relief for manufactured housing, so pushback against the CFPB reach in ways that made financing of manufactured housing unreachable for many Americans and just the whole range of legislative achievements in that bill.
If you look at the arc of my work in banking, when you look at it, what you'll see is, over and over again, a common theme. That theme is promoting the diversity and therefore the strength and resilience of our banking system. Diversity is our strength and our competitive advantage. S.2155 incorporated that idea with regulatory tailoring, which is under attack right now with Basel III.
Regulatory tailoring is exactly the right idea for our banking system, because as not only a member of the Financial Services Committee but also the foreign affairs committee I've traveled the globe. And when I travel, you see foreign banking systems, you see Europe, you see Asia, you see other parts of the world. And what you see is a lack of diversity. What you see is homogeneous, large, systemically important banks. What makes our system so unique, relative to other parts of the world, is that we have not just community banks, right, we have a lot of community banks. We also have midsize banks, regional banks, superregionals and then the GSIBS.
If there's an area of leadership that we have shown that is unique on the committee, that is the 11 letters in the seven hearings we've held to really chop wood on this Basel III endgame.
A lot of members of Congress can point to a career and say, well, I passed that bill, or I made a difference because I promoted legislation. I think most members of Congress and certainly most of the American people recognize that sometimes the biggest, most profound difference you can make as a member of Congress is actually stopping bad regulation. And this is, this is a $22 trillion regulation that would put our economy into a recession, if not a depression. So hopefully, we're able to put the brakes on this thing and see a withdrawal and a reproposal.
AB: Getting into the nitty-gritty of what it takes to run a committee, how do you feel about working with some of your Democratic counterparts? Have you been able to do that in the past, and do you see areas where you could accomplish some kind of bipartisan legislation?
Barr: Absolutely. I've served on the committee for 12 years, I've seen partisanship on the committee, and I've seen bipartisanship in the committee. I think I know the difference. I think sometimes a partisan approach is simply necessitated by the fact that there's a philosophical difference between the parties and you do the best you can and like in the case of the Financial Choice Act, you plant your flag in the ground and there's purposefulness in going to negotiate with the Senate and starting from a more aggressive position.
I also have seen effective leadership in the committee, where you start from the very beginning with a bipartisan approach and when you can do that, it's preferable. I have worked with Democrats to get them on my bills to advance them. We've worked across the aisle on the FIRMA bill that we did, we've got bills in this term of Congress right now that are bipartisan: There's a capital markets bill that's become law, [and] we've worked on a number of financial institutions bills as well.
I've got a pretty good relationship with a number of Democrats on the committee, including Ranking Member [Maxine] Waters, and we obviously are very different. We joke about how different we are. We disagree vehemently on many, many issues. But we've got a pretty good personal relationship.
I think that's going to be important in leading the committee, in being able to work through difficult issues. When we fundamentally disagree on policy, we need to at least work on process together so that the process doesn't derail good policy outcomes.
AB: Why should bankers or people who are affected by financial regulators read watch, or want to know about these oversight hearings? What's the purpose of them, and what would your goals be in the oversight function?
Barr: Ultimately the goal of oversight is to expose bad policy, to hold accountable agencies that are out of control or that are pursuing the wrong policies. What I'd like to do with oversight most of all is to highlight the fact that the regulations or the guidance or the administrative orders happen to often hurt the very people they're trying to protect. This is especially true with the CFPB.
Take the credit card late fee, for example. I'm looking to lead the [Congressional Review Act] resolution of disapproval on this this week. This proposed rule would drive [annual percentage rate] and interest rates on those credit cards up for on-time credit card borrowers, including subprime on-time credit card borrowers. How does that protect consumers?
AB: What's the biggest thing you've learned, or what have you changed your mind about in your years on the committee?
Barr: Originally, I didn't understand the Federal Home Loan Bank System as well as I do now. I think we still need a lot of reforming the [government-sponsored enterprises] and Fannie [Mae]/Freddie [Mac]. We need to eventually move them out of conservatorship and decrease the exposure to the taxpayer. But I do have an appreciation for the role that GSEs and the Federal Home Loan Bank System can play in providing liquidity in the system. I think that's something that I've gained an appreciation for over time.
Actually also, the Fed needs reform, but I appreciate the emergency liquidity role of the Fed, especially the discount window.
In fact, one of the things that I'm trying to do as we prepare for the liquidity proposal is destigmatize the discount window. Rather than banks that are having a difficult time or in stress or under duress, [they should] be able to access that lender of last resort as opposed to failing or, you know, result in the loss to the Deposit Insurance Fund. And I'd rather see the solution be emergency liquidity through the discount window, as opposed to a back-end systemic risk exception to rescue a failing bank.
