How Hensarling Will Guide the House Financial Services Panel

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Byline: Victoria Finkle

WASHINGTON a While the election on Tuesday remains a nail-biter in many respects, one piece of the puzzle is all but certain: Republicans are highly likely to retain control of the House.

The GOP leadership has not doled out committee leadership assignments yet, but most industry and Capitol Hill observers said they expect outspoken free market conservative Rep. Jeb Hensarling to lead the House Financial Services Committee next year.

aIt doesnat seem like anyone has put together a full campaign to challenge him for that spot,a said Edward Mills, a financial policy analyst at FBR Capital Markets and former Hill staffer. aIt seems extraordinarily likely that he ascends to the top spot.a

The Texas Republican is likely to be sharply different in tone, if not substance, than current chairman Rep. Spencer Bachus, who is term-limited from retaining his gavel.A Many said they expect Hensarling to merge two issues he sees as intertwined: revamping Dodd-Frank and reforming the government-sponsored enterprises.

aHensarling is going to see these two issues as connected a financial reform isnat separate from mortgage finance. There will be some attempt to build an agenda around that,a said Mark Calabria, director of financial regulation studies at the Cato Institute.

Hensarling, a native Texan, began his political career early, launching a Republican club in high school, according to the National Journal Almanac. Several years after graduating from law school, he started working as an aide for Sen. Phil Gramm in 1985, and was appointed as his campaign manager in 1990. Hensarling also served as executive director of the National Republican Senatorial Committee after Gramm was named chairman of the committee.A Observers say that his behind-the-scenes Hill experience, along with a decade of service in the House, should prepare Hensarling well to be effective as chairman.

aThis is not a guy whoas going to lose a fight because he doesnat understand the process,a said Calabria.A Hensarling has garnered a reputation for his public defense of the free market and limited government, voting with his party 95% of the time, according to the Washington Postas U.S. Congress Votes Database. Heas also known as a fierce debater.

aI always thought Bachusa biggest strength and biggest weakness is heas just a nice guy,a said Calabria. aThere were too many instances where [Ranking Member Rep. Barney] Frank was able to steamroll Bachus. I donat see anybody steamrolling Hensarling in a debate.aA Hensarling hasnat been shy in expressing his frustrations with the Dodd-Frank law, and those following the committee point to a number of ongoing issues he could raise as chairman. Those include changing the management structure of the Consumer Financial Protection Bureau to a five-person commission, making the agency subject to the budget appropriations process, imposing changes to derivatives requirements and altering instructions for how regulators should deal with atoo big to faila institutions.A Heas also taken a keen interest in GSE reform, repeatedly introducing legislation to cut off Fannie Mae and Freddie Mac from taxpayer dollars and privatize the institutions.

But on any of those issues, itas unclear whether Hensarling will be able to make big inroads. With an issue like GSE reform, his first challenge will be getting his own caucus on board. While Hensarling has taken the conservative tack, many housing groups, including important players like the National Association of Realtors and National Association of Home Builders, remain opposed to completely removing the government involvement in the secondary mortgage market. …