WASHINGTON — U.S. Rep. Jeb Hensarling has one more term left as House Financial Services chairman. With a Republican in the White House, he is ready to make it count.
The Dallas Republican is heading the GOP effort to gut Obama-era financial reforms as the head of the U.S. House Committee on Financial Services. And in a city where relationships mean everything, his best friends are two of the most powerful people in the government: Vice President Mike Pence and House Speaker Paul Ryan.
“I pick the best friends,” he said, smiling.
All three men share a passion for limited government, particularly in the American economy. And amid the early turbulence of the Trump era, this political trifecta is positioned to wield enormous influence over how money moves through the world economy.
Hensarling sat down with The Texsas Tribune last week to talk about this new political environment and the aim of his third and final term as chairman — his first with the GOP controlling Congress and the White House.
"We have a wonderful opportunity here," he said.
Now in his eighth term in Congress, Hensarling is, on occasion, a troublemaker for Democratic and Republican leadership. Most recently during Speaker John Boehner's era, he led an unsuccessful bid to kill the Export-Import Bank, a relatively obscure federal agency that is beloved by national business leaders and is important to Texas' economy.
During George W. Bush's administration, many Congressional Republicans fell in behind their leader and supported the 2008 bank bailout. Hensarling opposed it, and he surfaced as a rebel during those frantic days.
As chairman of the Republican Study Committee — the largest bloc of House conservatives — he was one of the highest-profile critics of the bailout plan pushed by the Bush administration and backed by the House GOP and Democratic leadership. That rebellion didn't stop him from later becoming the fourth-ranking member of GOP leadership.
Now, Hensarling says, it's time for American businesses to operate without the safety net of a federal bailout.
“I certainly hope President Trump will make it clear that we’re out of the bailout business,” he said.
“Well, I had an economics professor by the name of Phil Gramm, whose picture is over there,” Hensarling said, pointing to a photo in his office. “So, I would say he probably had as much to do with the shaping of my political thoughts as any human being.”
Just as Gramm was retiring from the Senate in 2002, Hensarling won a seat in the U.S. House — ensuring that his mentor’s philosophy would continue in Congress.
He quickly bonded with two fellow House members: future stars Pence and Ryan.
Hensarling described himself as a “sidekick” to Pence at the time. When Trump named Pence his running mate last year, Hensarling frequently traveled with his friend on the presidential campaign trail.
“I try not to bother him too much, but it’s nice to know that he’s there if you call,” Hensarling said.
As for Ryan, Hensarling came to know the future House speaker well during their days in the House minority, working on budget issues during the early Obama years.
Hensarling, Ryan, future Health and Human Services Secretary Tom Price and U.S. Rep. Jim Jordan formed "a little breakfast group where we met once a week and tried, really, to some extent, to be a bridge with leadership and the conservative movement,” he said.
Now, Hensarling and his friends have an open field to pass bills that were nonstarters under Obama. What will likely be Hensarling’s hallmark as chairman is the dismantling of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a 2010 law that Democrats passed to reduce the financial risk within the big banks, protect consumers from fraud and provide an orderly process to unwind “too big to fail” banks.
Hensarling argues that the “too big to fail” designation creates a moral hazard.
“I feel very very strongly that if you lose your ability to fail, you lose your ability to succeed,” he said.
Hensarling and his allies also charge that the bill was an overreaction and has since choked the economy. He argues that players in the financial industry ought to own the consequences to their actions.
“So what we’re trying to do ... is do everything we can to ensure we don’t have a repeat of the 2008 crisis in the first place," he said. "I’m not interested in downsizing firms. I’m not interested in super-sizing firms. I’m interested in right-sizing firms, according to market discipline, which I define as the appearance and reality of having your own money at risk so you have to go out and perform your own due diligence."
Within the Dodd-Frank legislation is a focal point of Hensarling's ire: the Consumer Financial Protection Bureau, a federal consumer protection agency focused on the financial sector that was the brainchild of Elizabeth Warren, D-Massachusetts, before she was elected to the U.S. Senate. Hensarling calls the agency “Orwellian" and "unconstitutional."
Democrats are furious with the direction Hensarling is headed. Party leaders say that the gutting of the overall Dodd-Frank legislation could inject risk and imperil the economy all over again. As for the CFPB, Democrats argue the agency is crucial to prevent fraud and they worry about the risk that repealing the legislation could inject into the economy.
"It took less than three weeks for House Republicans to show their hand on how they will renege on candidate Trump’s campaign promises to hold Wall Street accountable and help working Americans," Brown wrote. "The Hensarling proposal would transform the bureau from an effective watchdog into a toy poodle — nice enough if that’s your taste, but not very useful."
Hensarling donated most of his campaign money to the National Republican Congressional Committee, the House campaign arm that supports candidates like U.S. Rep. Will Hurd of Helotes who are in vulnerable House districts.
But complain as Democrats may, this is a Republican-run government now. The loyal opposition is largely powerless, and Hensarling is likely to make significant headway with his legislative ambitions.
This will be his last session as financial services chair — Republicans have term limits for chairmen.
At 59, he is young by congressional standards, and he won't say much about his future political ambitions. A few years ago, the Capitol Hill newspaper Roll Call pitched him as a possible future speaker, and his name often surfaces during leadership turnover.
“Now that I’m on my last hurrah [as chairman], I wish I had one more,” he laughed. “I’m just so focused on the opportunity that’s before me, an opportunity that I didn’t think would happen again, and that is to have a Republican in the White House as opposed to beating my head against a brick wall for the last eight years.”
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- U.S. Rep. Michael Burgess, a doctor, is postured to lead the charge on major changes to Obamacare.
- Back in 2015, Hensarling led a bid to kill the Export-Import bank.