Jeb Hensarling is finding out the hard way that conservative purity and running a powerful House committee don’t always mix.
Even though he holds the gavel of the House Financial Services Committee, he recently had a bill yanked from under him by leadership because he wouldn’t compromise, while top priorities — like overhauling the housing finance system — are stuck in limbo because he can’t muster a coalition for a floor vote.
The Texas Republican’s struggles on issues such as flood insurance, Fannie Mae and terrorism risk insurance offer a revealing moment for the tea party and the most conservative members of Congress: As they acquire more power, and chairmanships, can they actually legislate or do they stand on principle and risk getting pushed aside? For the time being, Hensarling is sticking to his conservative guns — while losing out on legislation.
Tensions between Hensarling and leadership were on display last week when the House passed a flood insurance bill over his objections and a similar dynamic could play out in the coming weeks and months as House Republicans decide how to handle the expiration of a terrorism risk insurance program and whether to reauthorize the Export-Import Bank.
If Hensarling’s policy positions are stirring up frustration among some GOP members, they also are winning the chairman praise among conservative activists who have recently clashed with Republican leaders.
“We think that more people should be following Jeb Hensarling’s lead on conservative policy,” said Barney Keller, spokesman for Club for Growth. “It’s a shame that Republican leaders try and stifle conservative policy instead of pushing moderates to support conservative policy.”
The flood insurance debate laid bare the differences within the House GOP conference.
Members from both parties pushed leaders to put legislation on the floor that would halt flood insurance premium hikes. The bill flew through the House on a 306-91 vote after the chairman’s multiple failed attempts to craft his own bill resulted in Majority Leader Eric Cantor (R-Va.) endorsing a different approach.
Hensarling said the bill went too far in scaling back changes made in 2012 intended to improve the program’s finances.
“One reason America is going broke is because of poorly designed and costly government-run insurance programs,” Hensarling said on the floor before casting his vote against the legislation. “The National Flood Insurance Program is one such program.”
Many GOP committee chairs backed Hensarling and voted against the bill, but to some of his GOP colleagues, it was an example of where he should have found a compromise.
“There is a feeling that Jeb can be too ideological, and I think also in the leadership,” said one GOP lawmaker who requested anonymity to candidly discuss a colleague. “The fact that leadership took it away from him is indicative.”
Adding to the mix is speculation that Hensarling may be interested in mounting a leadership challenge in the future.
Hensarling will soon find himself in another tricky spot as he turns his attention to the top priority for some Republicans on his panel: extending the Terrorism Risk Insurance Act.
TRIA offers a federal backstop to the insurance industry for losses resulting from acts of terrorism. It was enacted by Congress after the Sept. 11, 2001, terror attacks to encourage insurers to offer terrorism coverage so that major building and construction projects could proceed.
Banks, insurers and real estate groups have continued to lobby to keep the program alive after two extensions, arguing the insurance market can’t take on all the risk. The program expires at the end of this year.
But Hensarling has been skeptical about keeping the government backstop in place, or at least one as generous as the current program.
Reauthorization is naturally a top issue for members from big metro centers, but it also has broader appeal. Rep. Michael Grimm (R-N.Y.) introduced a five-year extension bill in February 2013, and its co-sponsors,including Republicans such as Rep. Peter King (R-N.Y.), represent districts across the country. King is also signed on to a 10-year extension bill by Rep. Michael Capuano (D-Mass.).
Rep. Randy Neugebauer (R-Texas), a Hensarling ally and chairman of the Financial Services insurance subcommittee, has instructed his staff to start putting together language for a TRIA bill with the hope of introducing something in the spring. Hensarling believes that “there is still time” to deal with TRIA before it expires at the end of the year, a committee aide said.
King said in an interview that last year, before the committee took a vote on Hensarling’s housing finance bill in July, the chairman made a promise to some members that the panel would consider TRIA during this Congress.
“That was a part of the commitment he made to me and Michael Grimm, before we voted on his housing bill,” King said.
It’s unclear, however, whether the bill that Hensarling ultimately introduces will satisfy his colleagues who are adamant about getting a long-term extension.
Neugebauer and Hensarling are opposed to simply extending TRIA as it currently exists as Grimm and others have proposed.
“The overall concept is to shift more and more of the risk to the insurance industry,” Neugebauer said in an interview. “What we want to do is put the TRIA program in the hands of the insurance industry.”
King hinted that the forthcoming negotiations could be tense. “It’s not going to be easy, I’ll put it that way,” he said.
One result of Hensarling stepping aside on the flood insurance vote is that it has raised the profile of the committee’s top Democrat — Maxine Waters.
The California Democrat helped draft the deal on the flood bill and said she’s prepared to play an active role in negotiations over the terrorism risk insurance program, whether Hensarling is involved or not.
“I really did make some great, great relationships working with the opposite side of the aisle [on flood insurance], but it’s a combination of relationships and the issue itself,” she said.
Also on the horizon is the expiration at the end of September of the charter for the Export-Import Bank, which aims to assist U.S. trade by financing some exports and is strongly supported by the business community.
Congress reauthorized the bank’s programs in 2012 with the support of House GOP leadership, but Hensarling voted against the bill. He made his feelings about the bank clear at a hearing last year.
“The Bank ostensibly makes loans backed by taxpayers that the private sector is unwilling to make,” Hensarling said during a June hearing. “If private creditors are unwilling to engage in these transactions, it begs the question, ‘Why should the American taxpayer?’”
Meanwhile, Hensarling has yet to gain much traction on his top priority — a housing finance overhaul bill he authored with Neugebauer and Republicans Shelley Moore Capito of West Virginia and Scott Garrett of New Jersey that the committee approved in July.
Hensarling has been a leading advocate of abolishing Fannie Mae and Freddie Mac, which were taken over by the government in 2008, and greatly reducing the government’s support of the mortgage market.
Getting rid of Fannie and Freddie was part of House Republicans’ “ Pledge to America” in 2010, but the politics of the issue have proved to be tricky.
Hensarling, however, plunged into the debate last year and produced a bill that would get rid of the mortgage finance giants and reduce the government’s role in the mortgage market to a scaled-down version of the Federal Housing Administration, which insures some loans.
The legislation as currently written doesn’t have enough support to get through the House, according to Hill and industry sources, leaving Hensarling’s most significant piece of legislation on the sidelines.
Some GOP members say the bill goes too far and would make home loans much more expensive and harder to get, a particular concern for members from either coast.
The housing industry — such as banks, real estate agents and home builders — has shifted its attention to a proposal being put together by the leaders of the Senate Banking Committee that is expected to allow the government, through a new agency, to stand behind more mortgages and attract more investors to finance future home sales.
Industry lobbyists said Hensarling has expressed little interest in changing his bill.
“The attention is on the Senate and, to be honest, that is where the creative thought is taking place,” an industry source said.
A Senate bill is also unlikely to receive a floor vote this year, easing some pressure for Hensarling to get his bill through the House this year.
His aides say the congressman continues to believe his proposal is Congress’s best chance of fixing the housing finance system.
“He has spoken to Republican leadership about his desire for a floor vote,” the committee aide said. “To date the PATH Act is still the only bill on the table to end the bailouts of Fannie and Freddie.”
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