News: Inside the GOP race to lead House Financial Services

Monday, November 18, 2024

Inside the GOP race to lead House Financial Services

Nov 18, 2024

By Eleanor Mueller, Jasper Goodman and Sam Sutton

Presented by

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QUICK FIX

House Republicans vying to chair the Financial Services Committee are ramping up their campaigns to win over key GOP powerbrokers. MM has a sneak peek at the pitches (and related apparel) from two top contenders, Reps. Andy Barr and French Hill, who are trying to tie their proposed agendas to President-elect Donald Trump.

Barr, who represents Kentucky’s 6th congressional district, is preparing to distribute booklets outlining his pitch (which you can read here) and “Make Financial Services Great Again” hats (which you can see here).

His plan for “Raising the Barr on Financial Services,” shared first with POLITICO, touts “the power of free-market capitalism” but makes the case that skeptics of globalization can also support the cause.

“Let me be clear: free market capitalism is ‘America First,’” Barr writes in the booklet.

In the first 100 days of the next Congress, Barr wants to advance a bill that would roll back financial regulations, support digital assets and fintech, “dismantle and reform” the CFPB and enact “market-based” approaches to housing finance and affordability. In his agenda, he promotes his record of leading on anti-ESG and China investment issues. He touts his legislation that would accelerate bank mergers and prohibit banks from “politicizing” lending decisions.

Hill, a former banker who represents Arkansas’ 2nd congressional district, has a pitch that will focus on his background working on financial policy and his plans for the next Congress, according to a House GOP aide with direct knowledge. The plans include his proposal to “make community banking great again,” which, like Barr’s pitch, includes nods to Trump, including a pledge to “reverse the weaponization of the government.”

Hill’s resume on financial policy issues includes time on the staff of Senate Banking as well as the Treasury Department and White House under former President George H.W. Bush. Most recently, he’s played a leading role in advancing cryptocurrency legislation that’s likely to be a major focus for Republican lawmakers next year.

What does it mean, and what’s next? Barr, Hill and two other contenders for the Financial Services gavel — Reps. Bill Huizenga and Frank Lucas — are expected to maintain the committee’s industry-friendly approach to financial regulations.

“All of them really believe what they believe … and they’re all pretty somewhat similar,” said a financial services lobbyist granted anonymity to speak candidly.

It’s a reason why the decision may come down to the distinct relationships they have with GOP leadership, which MM broke down last Monday . The competitive landscape will become a little clearer this week when steering members are elected. Chair contenders are expected to make presentations to the committee the week of Dec. 2.

For further reading, check out our POLITICO Pro interviews with Barr in November, July and February; with Hill ; with Huizenga; and with Lucas.

IT’S MONDAY — Send Hill gossip to Eleanor at emueller@politico.com and @eleanor_mueller and Jasper at jgoodman@politico.com and @jasper_goodman. As always, you can reach your usual host at ssutton@politico.com and @samjsutton.

A message from the Electronic Payments Coalition:

SHOW ME THE MONEY: CORPORATE MEGA-STORES POCKETED THE MONEY BREAKING THEIR PROMISE TO CONSUMERS. Corporate mega-stores promised they would lower prices for consumers if Congress put mandates on Americans’ debit cards. That never happened and the mega-stores pushing up costs pocketed more than $145 billion, according to the Congressional Research Service. Why should anyone believe this time will be different? CONGRESS: STOP THE MEGA-STORE WINDFALL & OPPOSE THE DURBIN-MARSHALL CREDIT CARD BILL!

Driving the Week

MONDAY … Chicago Fed President Austan Goolsbee will speak at the Financial Markets Group Fall Conference hosted by the Chicago Fed at 10 a.m. …

TUESDAY … October housing starts and building permits data will be released at 8:30 a.m. … The Senate Judiciary Committee holds a hearing on credit card swipe fees at 10 a.m. … The Joint Economic Committee holds a hearing on the 2025 tax policy debate at 10 a.m. …

WEDNESDAY … Federal Reserve Vice Chair Michael Barr, Federal Deposit Insurance Corp. Chair Martin Gruenberg, National Credit Union Administration Chair Todd Harper and Acting Comptroller of the Currency Michael Hsu will testify at a House Financial Services hearing at 10 a.m. … The Senate Appropriations Committee holds a hearing on disaster funding needs at 10 a.m … Fed Gov. Michelle Bowman will give a speech on agency policymaking at the Forum Club of the Palm Beaches … The Senate Banking, Housing and Urban Affairs Economic Policy Subcommittee holds a hearing on tax policy at 2 p.m. …

THURSDAY … FinRegLab will host its 2024 AI Symposium starting at 8:50 a.m. with scheduled appearances by Barr, Hsu, Consumer Financial Protection Bureau Director Rohit Chopra, Deputy Commerce Secretary Don Graves and Sen. Mike Rounds, (R-S.D.) … The Securities and Exchange Commission has a closed meeting at 2 p.m. … Commodity Futures Trading Commission Chairman Rostin Behnam will participate in a fireside chat at Georgetown University at 4:20 p.m. …

FRIDAY … Bowman will deliver a speech on Artificial Intelligence at the 27th Annual Symposium on Building the Financial System of the 21st Century in Washington at 6:15 p.m.

Hamlet on Palm Beach — Trump’s political revival was fueled by a populist and protectionist economic message that hit home with an electorate weary of Biden-era high prices and interest rates. Now the president-elect is having a hard time picking a quarterback to run his economic game plan, Sam reports.

Nearly two weeks after Election Day — and after a flurry of high-profile Cabinet picks that blindsided Washington policymakers and industry leaders alike — Trump has yet to name his pick for who will lead the Treasury Department. Fighting between Trump world factions that support transition co-chair Howard Lutnick and hedge fund executive Scott Bessent has spilled into public view.

— Two sources told Sam that the president has grown frustrated by the jockeying between the two top candidates, and his delay in making a selection has lifted the odds of other rumored contenders like Trump’s longtime trade policy adviser Robert Lighthizer, Sen. Bill Hagerty (R-Tenn.) and Apollo Global Management CEO Marc Rowan emerging as a spoiler. The New York Times on Sunday night reported that former Federal Reserve Gov. Kevin Warsh is also now in the running and that certain candidates may be asked to interview this week.

“President-Elect Trump is making decisions on who will serve in his second administration. Those decisions will continue to be announced by him when they are made,” transition spokesperson Karoline Leavitt said in a statement.

Sources close to the transition have said that Trump’s selection process was slowed as Lutnick exerted tight control over what information is presented to the president-elect, which created challenges for Bessent — or other candidates — to deliver their own pitch, Sam and Victoria Guida reported. Bessent met with the president at Mar-a-Lago on Friday.

— Enter Elon Musk: The unpredictable founder of Tesla and top adviser to Trump said on Saturday that Lutnick would be a stronger pick for the role, Sam and Michael Stratford reported. Bessent represented the “business-as-usual choice,” he posted on X , the social media network he purchased two years ago. “Business-as-usual is driving America bankrupt, so we need change one way or another.” He later added that he was open to hearing more about Bessent and the two reportedly spoke before Musk joined Trump ringside at a UFC match on Saturday night.

Robert F. Kennedy Jr., Trump’s choice to lead Health and Human Services, injected the incoming president’s crypto policy agenda into the mix with a post on X about how bitcoin would “have no stronger advocate than Howard Lutnik [sic].”

— Meanwhile, Bessent’s allies on Wall Street were campaigning as well, arguing that the macro hedge fund CEO’s solid understanding of markets would help the president execute his policies without causing undue disruptions to financial markets or the broader economy.

“I’ve known Scott for almost forty years, as he was my first professional hire at Chanos & Co.,” Jim Chanos, the famed short-seller, told MM. “While we might disagree on politics, there is no questioning his character, patriotism and intellect. He would make an outstanding Treasury Secretary.”

— Meanwhile , the FT on Sunday reported that Trump advisers have sought assurances from the top candidates that they “are committed to his sweeping tariffs plans.” The story included a detail about how Lighthizer – a tariff hardliner who served as Trump’s trade representative during the first administration — “had previously expressed interest in becoming Treasury secretary.”

Gavin Bade notes that protectionists over the weekend mounted a public campaign to boost Lighthizer as the conflict between Bessent and Lutnick swirled — with figures from both Right and Left-leaning populist groups pointing out his loyalty to Trump and longstanding support of tariffs.

Must read: Elizabeth Warren faces her biggest test yet — The Wall Street scourge and Trump antagonist is poised to become the top Democrat on the Republican-led Senate Banking Committee next year, giving her more power than ever on a panel where she has burnished her image as a progressive icon by berating bankers and bruising colleagues on both sides of the aisle. Her chances of success will hinge on her ability to work with GOP policymakers and mend fences within her own party, Eleanor reports.

Already, committee conservatives are plotting how they can take advantage of the rift among Democrats to win bipartisan backing in fighting Warren on looming issues like cryptocurrency regulation and economic nominees.

“I’ve told all the folks on the Democrats’ side who thank me for being bipartisan when I’ve took some tough votes, I said, ‘I look forward to y’all demonstrating that you can be,’” Sen. Thom Tillis (R-N.C.) said in an interview. “So I will be going back to some of them.”

— POLITICO’s Myah Ward and Megan Messerly: “Republicans suddenly think the economy’s great and the election wasn’t rigged”

REGISTER NOW: Join POLITICO and Capital One for a deep-dive discussion with Acting HUD Secretary Adrianne Todman, Rep. Darin LaHood (R-IL), Rep. Ritchie Torres (D-NY) and other housing experts on how to fix America’s housing crisis and build a foundation for financial prosperity. Register to attend in-person or virtually here.

TRANSITION 2025

Consolation prizes — Many of Trump’s initial Cabinet picks drew from his shortlist for vice president, Jeff Coltin and Kimberly Leonard report. The upside for the transition team? “They’re screened, they’re loyal and they’re ready to go.”

Energy — Trump named oil industry CEO Chris Wright to lead the Energy Department, installing a vocal critic of government efforts to fight climate change as the head of the agency, Ben Lefebvre, Josh Siegel, Zack Colman and Kelsey Tamborrino report.

DOGE Targets — WaPo’s Jacob Bogage: “Trump government efficiency advisers Elon Musk and Vivek Ramaswamy have pledged not to bring a chisel to government spending, but rather “a chainsaw.” The particular approach Ramaswamy has in mind could threaten dozens of programs that tens of millions of Americans rely on each day.”

A message from the Electronic Payments Coalition:

On the Hill

First in MM: Scott calls on Biden to pause rules, nominees — Sen. Tim Scott (R-S.C.), who’s poised to chair Senate Banking next year, is asking Biden and his agencies to cease rulemaking and withdraw nominees, Eleanor reports.

“I will not vote for, or advance, any nominees put forth in front of the Committee by your administration,” Scott wrote in a letter Sunday. That includes Biden’s pick to take over as SEC chair, Christy Goldsmith Romero.

First in MM: Chopra’s parting shot on deposit insurance: CFPB Director Rohit Chopra today will call on Congress to renew discussions about expanding federal deposit insurance, citing the failure last month of a small Oklahoma bank where some small businesses are expected to take a loss on their deposits.

In a statement to the FDIC board being released this morning, Chopra says it’s “fundamentally unfair” that some uninsured depositors at the small community lender—First National Bank of Lindsay—won’t get back their money while regulators protected uninsured depositors at Silicon Valley Bank and Signature Bank in March 2023. Officials backstopped those deposits over concerns about a systemic financial meltdown.

“In other words, big businesses putting their money in big banks enjoy free deposit insurance, and small businesses putting their money in small banks don’t,” Chopra says in the statement, adding that dynamic “gives an unfair competitive advantage to the largest banks in the country.”

Chopra, who’s expected to be out of his job when Trump takes office in January, says Congress should “remove — or at least dramatically increase — limits on federal deposit insurance for payroll and other non-interest bearing operating accounts.”

First in MM: Visa, Mastercard execs to testify on swipe fees — Bill Sheedy, senior adviser to the CEO for Visa, and Linda Kirkpatrick , president of the Americas for Mastercard, are slated to testify at a Senate Judiciary hearing Tuesday on credit card swipe fees, two people with direct knowledge of the plans told Eleanor. Chair Dick Durbin (D-Ill.) scrapped a similar event in April after Visa and Mastercard CEOs turned down an invitation to appear. Senate Judiciary did not respond to a request for comment.

It’s beginning to look a lot like “next year” — Lawmakers are increasingly accepting the likelihood that crypto legislation passes next year, Jasper and Eleanor report.

A Republican Congress and Trump administration are poised to take over Washington in January, all but guaranteeing that industry-friendly faces will head key committees and regulatory agencies. That’s spurring GOP members to wait to push through changes that would legitimize digital assets so they can bypass Democrats.

“I’d definitely rather wait,” said Rep. Warren Davidson (R-Ohio), a Trump ally who sits on the House Financial Services Committee. “I think we have a chance to do a better, more comprehensive approach in the new administration with a new Senate.”

First in MM: House Democrats call out Treasury’s handling of crypto ‘mixers’ — Rep. Sean Casten is leading half a dozen House Financial Services Democrats in requesting more information about Treasury’s efforts to shut down Tornado Cash — a so-called crypto mixer that makes it easier to evade sanctions and money-laundering rules by anonymizing digital assets transactions, Eleanor reports.

“Despite sanctions, Tornado Cash has remained online,” the lawmakers wrote. They add that “in the first half of this year alone, Tornado Cash accepted more than $1.8 billion in deposits.”

Jobs report

Ryann DuRant has joined Citi as the bank’s director of policy communications within its strategy, NAM and financial communications team. She was previously a senior communications advisor to Senate Banking’s top Republican Tim Scott of South Carolina, and also worked as a leadership press secretary for Sen. John Cornyn (R-Texas) in his capacity as Senate Majority Whip.

The lame duck session could reshape major policies before year's end. Get Inside Congress delivered daily to follow the final sprint of dealmaking on defense funding, AI regulation and disaster aid. Subscribe now.

Odds and Ends

— The Financial Technology Association (FTA) launched its annual campaign, Smarter Than Scams, to avoid payment scams during the holiday shopping season.

A message from the Electronic Payments Coalition:

DON’T LET CORPORATE MEGA-STORES TAKE FROM CONSUMERS… AGAIN!
Corporate mega-store lobbyists are at it again. They promised to lower prices for consumers if Congress enacted new mandates and price controls on debit cards. Congress gave them what they wanted, passing the Durbin Amendment, but consumers never saw those savings. The Richmond Fed reported 98% of retailers actually RAISED PRICES or kept them the same. Home Depot’s Chief Financial Officer Carol Tomé said on an earnings call in 2011 the company could gain $35 million in revenue annually from lower fees. Today, mega-stores are making the same broken promises if Congress passes new credit card routing mandates. THE DURBIN-MARSHALL CREDIT CARD BILL IS A MULTIBILLION-DOLLAR CORPORATE WINDFALL PAID FOR BY AMERICAN CONSUMERS via less secure transactions and a loss of rewards and services.