Texas Republican Jeb Hensarling is standing in the way of President Donald Trump’s next big legislative victory.
The outgoing chairman of the House Financial Services Committee, backed by House leadership, is refusing to rubber-stamp the landmark bank deregulation bill the Senate passed Wednesday night in an overwhelming, bipartisan vote after years of work.
The White House wants a bill on Trump's desk as soon as possible. But Hensarling warned Thursday that the House would sit on the legislation until senators agree to negotiate how to expand the package to include proposals that would benefit more sectors of the financial industry.
That’s something the lawmakers are showing no appetite for after a brutal floor debate leading up to the bill's passage.
“Some seem to be under the impression that we are going to vote on their bill," Hensarling said. "They are under a misimpression."
Hensarling's refusal to accept the Senate proposal — which already incorporates about 40 pieces of House legislation — is stoking fears among some in the Trump administration and in the finance industry that their big win may become mired in the House.
For the conservative lawmaker, a legacy is on the line. He faces a short window to put his imprint on the most important banking legislation since the 2010 Dodd-Frank law — probably the last major initiative he’ll deal with before he steps down in January.
Senate Democrats who helped draft and pass the bill have inflamed tensions with the powerful committee chairman as well as House leaders by saying there's little room to modify the legislation. In a comment that rattled House Republicans, Sen. Jon Tester (D-Mont.) said Wednesday, "If he adds a bunch of crazy shit, it's going to die."
“We've gotten it through the Senate," Tester said. “If he screws it up in the House, it's not going to go anywhere, and that would be real unfortunate for our community banks and credit unions."
Hensarling has refused to back down, and he's now trying to force the Senate Democrats to come to the negotiating table.
"The next step is for certain senators to realize that for this to get to the president's desk they will have to negotiate in good faith," he said. "I'm not sure everyone has awakened to that reality."
It’s familiar territory for Hensarling. His tenure as Financial Services chairman has been marked by a struggle to advance conservative economic policies that he says are critical to protect taxpayers and curtail government intervention in financial markets. He has at times let those steadfast beliefs trump pragmatism, even if it meant losing a legislative battle.
This time, he's fighting for bills that he says have broad support from Democrats as well.
Since he became chairman in 2013, the Financial Services Committee has been the spawning ground for dozens of pieces of legislation intended to scale back regulations. Amid resistance from former President Barack Obama, the Senate and the top Democrat on his committee, Rep. Maxine Waters (D-Calif.), much of the legislation that Hensarling ushered through the House failed to become law.
But his deregulatory efforts "kept the fire going," said Independent Community Bankers of America President and CEO Cam Fine.
"He kept pounding the drum during the Obama administration," Fine added. "As chairman, he kept having his committee pass correction bill after correction bill after correction bill even though they didn't go anywhere in the Senate. It was a constant reminder that there were things happening that were hurting the local financial institutions."
Trump’s election changed the equation. Coupled with control of Congress, Republicans — and a coalition of willing Democrats — found their first real opportunity to revise Dodd-Frank.
Hensarling wasted little time. He drafted a sweeping deregulatory bill called the Financial CHOICE Act that the House passed in June. It failed to attract a single Democratic vote, dooming its chances of becoming law.
Late last year, Hensarling announced his plans to retire and pivoted. He began moving a raft of narrower, bipartisan bills, including pieces of the CHOICE Act, that would chip away at regulations in a more targeted fashion.
At the same time, Senate Banking Chairman Mike Crapo (R-Idaho) began ramping up talks with moderate Democrats on how to move a wide-ranging bank deregulation bill through the Senate. The negotiations, which built upon talks that had been quietly under way in the Senate for years, produced the bill the Senate passed Wednesday in a 67-31 vote. Sixteen Democrats withstood a barrage of attacks from the progressive wing of their party to help advance the legislation.
The next morning, Hensarling stood his ground. He described the Senate bill as "an important first step in getting a bill to the president's desk" and demanded that senators sit down with him at the negotiating table.
"I have spoken to the Speaker, and I am assured that S. 2155 will stay on his desk unless and until the Senate negotiates with the House," he said.
Hensarling's office has circulated a list of 30 bipartisan bills that he wants to be considered. In a press briefing Thursday, Hensarling highlighted a few of them, including proposals aimed at easing rules for "angel" investors and mergers and acquisitions brokers. In addition, he said there was language in the Senate bill that he wanted to negotiate.
Hensarling has declined to highlight that the Senate bill includes dozens of proposals that have also moved through the House — a fact that the bill's supporters are beginning to tout amid the emerging legislative stalemate.
"There's a ton of stuff," Sen. Heidi Heitkamp (D-N.D.) said Wednesday. "[National Economic Council Director] Gary Cohn was an honest broker coming back and forth saying, 'Here's the list.' A lot of what's in this bill already is stuff that has had tremendous support over in the House and the House has done a good job on."
For Hensarling, however, it's still worth pushing for a few more to be included.
"The good news is if they respect our work product there's so much more for them to choose from," he said.
A Crapo spokeswoman declined to comment Thursday on Hensarling’s request for negotiations. Democrats indicated they had no desire to expand the Senate legislation. Heitkamp said in a statement that the bill was “carefully crafted so it would maintain strong bipartisan support.”
Hensarling is insisting on negotiations even as some House Republicans have admitted publicly that the Senate was already under strain. Last month, Rep. Patrick McHenry (R-N.C.), the vice chairman of the Financial Services Committee and one of the House's top vote counters, said the Senate was "at its limit with that piece of legislation."
The rift between the House and the Senate is exposing the legislation to a fresh wave of lobbying from sectors of the finance industry dissatisfied with the bill, including large insurers, big banks and credit-reporting companies.
At the same time, Hensarling has begun to face unusually public pressure from lobbyists who want the Senate bill to become law without delay.
"We agree with Chairman Hensarling that not every single good proposal is in the bill," said Fine of the community bankers trade group. "However, we will not participate in killing a solid bipartisan bill just because it does not have everything we could want in it. We will not participate in making the perfect the enemy of the good."
A senior Trump administration official praised the House for passing bills with bipartisan support.
"There's been a lot of good policies that have been shaped in the House and Senate that are coming together in this bill," the official said. "The president has said he would sign the bill."