WASHINGTON — One of the most powerful posts in Washington's financial policy scene is up for grabs, and the competition to take it is heating up.
Rep. Patrick McHenry, R-N.C., chairman of the House Financial Services Committee, is retiring at the end of the current Congress, leaving open the top Republican spot on the committee that leads the lower chamber's banking policy priorities. The lead Republican on the House Financial Services Committee will either be the chairman or the ranking member of the panel — depending on which party controls the U.S. House of Representatives after November's elections — and will be a critical voice in the Republican party's priorities when it comes to banking policy.
One of the leading candidates for that spot is Rep. French Hill, R-Ark., a former banker and longtime member of the committee who's seen as a policy-matter expert on banking issues, and currently serves as the panel's vice chairman. Hill took over regular operations of the committee when McHenry was briefly elevated to House leadership last year amid a leadership struggle within the party, and he played a
He's also the chairman of the new
Hill is up against Reps. Andy Barr of Kentucky, Frank Lucas of Oklahoma and Bill Huizenga of Michigan for the top spot. More conversations with contenders for the top GOP spot on the panel will follow later this week. Ultimately, the chair or ranking member will be decided by the Republican steering committee after the November elections.
What follows is a transcript between American Banker and French Hill on his pitch to become the next top Republican on the committee. Hill outlines his deep experience in the banking and policy world, and what he would work on as the leading Republican on the House Financial Services Committee panel. Some of his central ideas include focusing on agency oversight and pursuing policies related to his belief in tailoring bank regulations for institutions of different sizes.
The transcript has been edited for length and clarity.
American Banker: What's your pitch to fellow Republicans here? What makes you different from other candidates in this race, and why do you think you're the best choice for this?
Hill: I believe what sets me apart from others is my deep experience in the financial sector and in the public sector. In the private sector I've served as a senior officer of two publicly traded bank holding companies, I've been a top executive in three different broker dealer operations, I've been the founder, the chairman and the CEO of a startup de novo community bank which I ran for 15 years, and in addition to that, for five years I was in the private equity, venture capital business. So I've seen the financial services business from a private sector point of view.
In my public sector experience, I was a staffer on the Senate Banking Committee in the '80s, and was very involved in the first successful legislation to create a private mortgage-backed-securities market. I spent spent four years in the Bush 41 administration, the first two years at Treasury both in domestic finance and supervisory banking policies during the credit crunch of 1990, and also at Treasury was very involved with the international portofolio, serving as a negotiator with Japan as well as coordinating all the economic and financial sector assistance to Eastern Europe.
Those private and public sector experiences with now nine years (soon to be 10 years) on the committee, will set me apart on the experience factor. I have a strong managerial background that I believe certainly sets me apart in terms of managing the committee and managing the outputs of the committee.
AB: Can you talk a little bit about your experience as a community banker? Has it helped you? What kind of insight does it give you into committee issues?
Hill: Having been a CEO of a community bank has been immensely helpful in policy work on Capitol Hill. It allows me to speak in practical, everyday terms about the impact of existing regulations and supervisory practices, as well as how to suggest changes based on experience that would make the system remain safe and sound, but work in a more effective way. My time in the private sector has made me a very strong supporter of tailoring supervisory practices and regulation. What's appropriate for a $400 or $500 million bank in Arkansas is certainly not the same level of scrutiny and oversight required for a large international, complex organization. Plus the burden and cost associated with layering new regulations on top of old regulations, people who have been in the industry recognized the duplicative and conflicting nature of how regulations are rarely changed and are more frequently added on top of existing ones. I think that causes me to be skeptical and scrutinize proposals.
AB: What would be your major priorities as either chair or ranking member? Do you have any policies you feel particularly strongly about that you want to see get across the finish line?
Hill: It's my intention to design effectively a matrix of the policy priorities for the committee given: Do we have the House and Senate in Republican hands, and the White House in Republican hands, or is there some mix?
It doesn't change the big themes, but it does in fact change the tactics and priorities of how the committee could be the most effective. But I would argue that certainly expanding capital formation and lowering the cost of capital for startup firms and for business generally is important.
As it relates to the regulatory system, my view is that the committee should look for ways to strengthen the compliance with the Administrative Procedures Act of agencies under our jurisdiction, and be very diligent about reauthorizing programs that have not been authorized for a number of years. With
Other themes, I would say helping design how markets can lead to better housing affordability will be important. Promoting consumer choice, data powership and data privacy are things we've worked on for a number of years and hopefully we'll make progress on those.
Two points I'd leave you with: I think there are a number of key priorities that will be developed in the source of the year, but I'll put them in context of whether or not we have a Republican president and a Republican House and Senate as I design the priorities and the tactics on how to achieve them.
AB: What do you think of as your biggest legislative achievements on the committee? What work are you most proud of?
Hill: It's been almost ten years now that I've been engaged on the committee, and I've worked hard to find bipartisan and bicameral priorities. When I was a freshman, I began work on how to have open research for Exchange Traded Funds, and that bill was a bipartisan, bicameral bill that was included in S.2155 back in 2018. That was one of my first policy proposals from when I was a freshman member.
In this Congress, I offered one of the most comprehensive and complex measures that has had strong bipartisan support. This is my fit-for-purpose regulatory framework for digital assets bill, which really is needed, and I hope that we make progress on this committee, but if for some reason we don't, that would be a key and smart priority for the next Congress.
I've also offered extensive reform legislation for the International Monetary Fund and how the international financial institutions are organized. In my view that's an area that will take multiple years to get finished.
More big topics for next Congress that the committee has to continue to try to make progress on, and are directly connected to whether we have the White house or the Senate, one is mortgage finance on restructuring Fannie Mae and Freddie Mac from the conservatorship, and then of course the issue of reauthorizing the National Flood Insurance Program. These are longstanding important topics for the committee, and they've been hard to find political consensus on.
AB: Since working on digital assets legislation, has your opinion on crypto currency, stablecoins or other digital assets changed? What have you learned about them in the last couple of years?
Hill: First, existing supervisory procedures and regulations were inadequate in my view to oversee these markets without changes, hence the payment stablecoin legislation, the privacy legislation and the fit-for-purpose legislation. These are important components that will allow America to have an innovative digital assets space done in a safe and sound way, and preserve America's leadership. Because without policy changes, we're seeing a lot of innovation and technological advances move to other nations and outside the country. That's not good for innovation purposes, and in my view it's not good for illicit finance purposes. We want to have the highest standards and the best policies here in the U.S.
Chairman Gensler in my view could have used his own discretion and done some rulemaking in this area that would have made it better, but he chose not to do that. So I believe our legislative approach, which is keeping with the Biden administration's executive order, is the best way to go. Secondly, I've learned that this is an emerging area that has, like all emerging financial innovations, has fraud associated with it, has inadequate supervision associated with it, and that's why again, taking a strong legal and legislative approach is going to make it much better for our consumers, our innovators and our technologies.
AB: In what areas do you think you could find compromise with Democratic lawmakers to further your own priorities?
Hill: If you believe strongly that your legislative idea, if passed, would advance policymaking in the country and would be better than leaving the current law alone, then typically you can find some common ground with the other party to make those positive steps forward, even if it's a more modest advance than you might do if you were able to make the proposal strictly on a partisan basis. That's basically something that I've successfully seen happen and been part of for the bulk of my career. As I say, it takes hard work and it takes, in my view, also a bicameral approach, to bring that to fruition. And sometimes the negotiation is within your own party, so it's not always purely about polarization.
