Two years after his party’s leaders stripped much of his power as the top Republican on the House Financial Services Committee, Representative Spencer Bachus is within reach of taking the chairmanship from Democrat Barney Frank during the biggest regulatory overhaul since the 1930s.
Bachus, of Alabama, has turned away several challengers and is likely to replace the Massachusetts lawmaker if Republicans gain at least 39 House seats in the Nov. 2 elections and assume control of the chamber, according to Republican committee members and two Republican aides.
During Frank’s tenure, Congress approved the most sweeping financial legislation in decades, giving the federal government power to seize mortgage giants Fannie Mae and Freddie Mac, spend $700 billion on a bank bailout and rewrite Washington’s rules for Wall Street. Republicans said that if they take power, the financial industry can expect the panel to influence how new regulations are implemented and enforced.
“You’re going to see a more methodical approach -- ‘Let’s have more hearings, let’s slow the process down a little bit,’” Representative Randy Neugebauer, a Texas Republican and deputy ranking member of the committee, said in an interview.
Talk from Republican leaders such as Minority Leader John Boehner that Congress might try to repeal part or all of the Dodd-Frank regulatory law will likely run up against the reality of divided government. Even if the Republicans win control of the Senate, which polls suggest is unlikely, the president would still hold veto power over Congress.
‘Art of the Doable’
“Regardless of who is in the majority, Barack Obama is still going to be president, so we’re going to have to look at the art of the doable,” said Representative Jeb Hensarling, 53, of Texas, a senior Republican on the panel.
There will be change in the Senate even if the Democrats retain control. Senator Christopher Dodd, the banking committee chairman who worked with Frank to shepherd the regulatory overhaul law, is retiring. Senator Tim Johnson, a South Dakota Democrat, would take his place if his party holds a majority. If Republicans win, Senator Richard Shelby of Alabama is in line.
Each of the members has had success raising funds from the financial industry. Frank, 70, has pulled in $956,600 in the current election cycle from individuals and political action committees aligned with finance, insurance and real-estate companies, according to the Center for Responsive Politics, while Bachus collected $655,600. Dodd, 66, who announced his retirement in January, banked $2.8 million from the industries and his counterpart Shelby pulled in $2.1 million. Johnson, who isn’t running for re-election until 2014, raised $1.6 million.
For Bachus, 62, an ascent to chairman would mark a comeback from a political stumble in the fall of 2008. As the senior Republican on the financial services committee, he was expected to lead his party’s negotiations on the $700 billion bailout that became known as the Troubled Asset Relief Program. Instead, Republican leaders lost confidence and removed him from that role.
Then he earned the ire of some party members when he changed his position on the bailout, attacking it in a private meeting and then voting for it, according to two Republican aides who were at the meeting.
Republican leaders later forced Bachus to distribute much of the committee’s portfolio to other party members.
During the debate on the financial overhaul, the Republican opposition to Frank was led by Bachus’s deputies, including Hensarling, Neugebauer, Scott Garrett of New Jersey, Judy Biggert of Illinois and Shelley Moore Capito of West Virginia. During the conference committee, the final stage of the debate, at the bidding of Ohio’s Boehner, Republicans crafted a strategy in which they offered amendments to force Democrats into difficult votes instead of trying to reshape the legislation, according to a Republican lawmaker and two aides.
The member and Republican aides declined to be identified because the talks were private. Through a spokeswoman, Marisol Garibay, Bachus declined to comment for this story.
Neugebauer attributed the Republican leadership structure on the committee during the past two years to “a very deep bench,” and panel members said they would stick with the setup if they take control.
“I expect that Spencer Bachus will be our next chairman,” said Hensarling. “It’s a testament to Spencer’s leadership style that we have the team effort we do.”
Bachus also has engendered support through his fundraising for Republican candidates and colleagues, ranking among the top members this year in donations to the National Republican Campaign Committee, the party’s campaign arm for House races.
Bachus is aligned with the Republicans pushing for free markets and less-intrusive regulation. From the beginning of debate over what became the Dodd-Frank law, he led opposition to measures such as resolution authority to wind-down failing firms, calling them “back-door bailouts.” He also fought against the new Consumer Financial Protection Bureau, and has questioned the legality of Obama’s appointment of Harvard Law School Professor Elizabeth Warren to an advisory position.
To be sure, the final decision won’t be made until the Republican Steering Committee meets after the election.
“Decisions on committee ranking members or chairmen for the 112th Congress will be made by the Steering Committee at the appropriate time,” said Michael Steel, Boehner’s spokesman.
Bachus still could face a chairmanship challenge from Representative Ed Royce of California, according to two Republican aides. Royce, a senior Republican on the panel, has made an overhaul of Fannie Mae and Freddie Mac a central point of his legislative work for much of the past decade and served on the Republican side on the joint House-Senate conference committee that finished drafting the financial overhaul bill.
“Mr. Royce is tirelessly working to get back the majority,” Audra McGeorge, his spokeswoman, said in an e-mail. “Currently his focus is on November.”
Democrats on the committee said they are concerned that a loss by their party could undo their attempts to rein in banks during the past two sessions of Congress.
“I’ve really not seen Republicans willing to take on the industry at all,” Representative Brad Miller, a North Carolina Democrat, said in an interview. “Their enthusiasm for the task of making sure the law is implemented properly may be wanting.”
Even if Democrats hold the Senate, Johnson’s leadership of the banking committee may move the panel to the right, said Brian Gardner, a former congressional staff member who is now a financial services analyst for Keefe, Bruyette & Woods Inc.
Johnson, a three-term Senator, has split with fellow Democrats on votes to crack down on credit cards, a prominent industry in his state, and he was one of nine members of the party to vote against the $700 billion bank bailout.
“You’re now going to go from a liberal Democrat in Dodd who went along with the administration quite closely to a centrist Democrat from a very conservative state,” Gardner said.
Dodd, the Senate’s leading voice during the financial overhaul talks, is leaving a committee that had several members make contributions to the final bill. Johnson would become chairman of a panel that had at least five Democrats play major roles in shaping the Dodd-Frank law. Shelby’s Republicans will have a different look, with retirements and election defeats removing at least four of the party’s 10 panel members.
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