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Expected Financial Services chair found consensus with Democrats

McHenry would be the youngest person to hold the post and pursue a conservative agenda

Ranking member Rep. Patrick McHenry, R-N.C., and Chairwoman Maxine Waters, D-Calif., conduct a House Financial Services Committee hearing in September.
Ranking member Rep. Patrick McHenry, R-N.C., and Chairwoman Maxine Waters, D-Calif., conduct a House Financial Services Committee hearing in September. (Tom Williams/CQ Roll Call file photo)

Rep. Tom Cole, an Oklahoma Republican, says he was upstaged in September at a fundraiser for his own reelection campaign. About four dozen lobbyists at Joe’s Seafood, Prime Steak & Stone Crab in downtown Washington were more interested in listening to his guest speaker, Rep. Patrick T. McHenry, a North Carolina Republican, than to him.

“He’s a legitimate draw,” Cole told CQ Roll Call in an interview. “People are interested in what Patrick McHenry has to say.”

They include McHenry’s Democratic colleagues on the Financial Services Committee. In interviews with CQ Roll Call, three Democrats said McHenry has sought to find bipartisan legislative consensus.

The question for them will be whether that spirit of cooperation continues with McHenry in the committee chairman’s seat if the Republicans take the House, as they are widely predicted to do.

“He’s very open to ideas,” New York Rep. Carolyn B. Maloney said. “I’ve sponsored a lot more bills with him than the previous Republican chairman [Jeb Hensarling of Texas].”

Maloney credited McHenry for helping her improve an anti-money-laundering bill that drew enough Republican support for it to become law last year.

Rep. Jesús “Chuy” García of Illinois, a staunch progressive, is well aware of McHenry’s conservative views. Last year at a committee hearing, McHenry criticized a bill Garcia co-sponsored that would require public companies to disclose their environmental, social and governance policies, saying the legislation “tossed bipartisanship aside to cater to the far left.” The House passed the bill by a single vote, 215 to 214, but the Senate has not voted on the legislation.

Yet, Garcia described McHenry as “an effective consensus builder.”

Rep. Gregory W. Meeks of New York cited McHenry’s work with Financial Services Chairwoman Maxine Waters, D-Calif., on minority depository institutions and community development financial institutions this year. (Waters declined to be interviewed, saying she does not discuss other lawmakers.)

Asked to discuss McHenry’s priorities, Meeks flashed a toothy smile to poke fun at House Republicans. “We’re hoping he remains an excellent ranking member,” he said.

A youthful chairman

CQ Roll Call elections analyst Nathan L. Gonzales and his Inside Elections team project the GOP will pick up more than enough seats to take the House, expecting them to gain between eight and 25.

McHenry, a nine-term lawmaker, represents a safe Republican district in the western Charlotte suburbs. Now ranking Republican on Financial Services, McHenry in April announced plans to seek the post of chairman if his party prevails. That would make the 47-year-old the youngest person to wield the committee’s gavel in more than 100 years.

As chairman, McHenry would pursue a conservative agenda. He opposes the Securities and Exchange Commission’s ESG proposals and favors lightening federal rules over companies raising money. At the same time, he supports federal oversight over cryptocurrencies and companies that collect consumer data.

As a Catholic and son of an owner of a lawn care company, McHenry has been a conservative since college, where he was chairman of the North Carolina chapter of College Republicans, whose national chapter was the training ground for GOP operatives like Lee Atwater and Grover Norquist.

“I had the Republican activist mindset,” McHenry said in an interview at the Capitol, citing his first three years after he was elected to Congress in 2004.

He votes the party line on most issues. The economically conservative organization Club for Growth gives McHenry’s voting record a score of 81 percent lifetime, with his most recent score, last year, being 92 percent.

The Financial Services Committee oversees commercial banking, investment firms and financial technology companies, and McHenry has raised millions from lobbying organizations that represent them. From January 2021 through this September, those three industries alone accounted for $1.3 million of the $3.4 million his campaign committee raised overall, according to OpenSecrets.org.

McHenry’s political views have changed little since taking office. Yet, he has changed his legislative style. He said instead of perceiving Democrats as the opposition, he seeks to cultivate relationships with them in the interest of striking bipartisan deals.

“It was an evolution,” McHenry said. “My second term, I went back and looked, I studied, to figure out my role here. I read a lot of books about Congress, more than a dozen.”

In his second term, McHenry became one of 15 to 20 deputy whips. Combined with his knowledge from books like John M. Barry’s “The Ambition and the Power,” about the fall of Democratic House Speaker Jim Wright in the late 1980s, McHenry said he saw the value in convincing colleagues he was considerate, professional and trustworthy.

“I had to help out on big votes,” said McHenry, who became the GOP chief deputy whip in 2014. “It taught me a lot: how different members think, how they process information, how they engage with others and their district. Participation is what helped knock the edges off.”

Even a McHenry critic on Financial Services, Rep. Al Green, D-Texas, said he is willing to work with him. “He has an agenda, but then, every member of Congress has an agenda,” Green told CQ Roll Call. “And I’ve found him to be affable and have had dinner with him.”

Priorities

McHenry said as Financial Services chairman he would have four priorities, some of which are sure to rankle Democrats.

His first goal would be to provide “appropriate” and “vigorous oversight” of the Securities and Exchange Commission and Commodity Futures Trading Commission, the two main federal agencies that oversee Wall Street.

Conservatives are eager to have SEC Chairman Gary Gensler in person to explain his proposals on ESG and private-fund advisers. Gensler has not testified before Financial Services this year.

“I would give Gensler a permanent parking pass at Rayburn so he could appear before us all the time,” Rep. Bill Huizenga, a Michigan Republican, told CQ Roll Call. On Oct. 25, Huizenga and McHenry renewed their call for Waters to hold a hearing for Gensler to appear.

McHenry has said several SEC proposals fall outside the agency’s jurisdiction. One proposal, similar to a bill the House passed last year, would require public companies to reveal climate-related disclosures in their registration statements and periodic reports. McHenry said Congress should vote on the proposal rather than leave it in the hands of “unelected bureaucrats.”

Yet Rep. French Hill, an Arkansas Republican, expects McHenry to work with Gensler on revising SEC proposals related to preventing companies from “greenwashing,” which is the practice of providing misleading or false information about environmental practices.

“Patrick is a gifted strategist,” Hill told CQ Roll Call. “He knows what’s possible, and he can work with Chairman Gensler on issues like greenwashing.”

McHenry’s second priority would be to propose policies that would help businesses raise money. He has echoed both a long-standing Republican concern that the number of public companies is too low and said some federal securities laws disadvantage Black and Latino investors.

In April, McHenry promoted GOP legislation to expand the Jumpstart Our Business Startups Act of 2012. One legislative proposal would create an exemption for small businesses that raise $250,000 to $500,000 a year. Another would direct the SEC to create an exam for those seeking to qualify as accredited investors. That would loosen current law, which is restricted to those who meet certain income and educational thresholds.

“That so few minorities qualify as accredited investors makes it harder for minority entrepreneurs to get their startups off the ground,” McHenry wrote in the report.

McHenry’s third priority would be to increase regulatory oversight of stablecoins, which are digital tokens that attempt to tie their value to an external reference such as gold or the U.S. dollar.

In January, McHenry wrote to Waters saying the Financial Services Committee should “further examine whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate.” The need for federal oversight grew after the market for Terra UST, a stablecoin whose value was pegged to its sister currency Luna, crashed to virtually nothing in May. The $60 billion market value of the cryptocurrencies was suddenly wiped out, leaving some investors ruined.

In the summer, McHenry and Waters floated a plan that would direct the Federal Reserve to license nonbank stablecoin companies and impose a two-year moratorium on stablecoins whose value is tied to computer algorithms rather than cash or gold.

“We’ve come up with a pretty ugly baby,” McHenry said at a conference in Washington on Oct. 12. “It is a baby, nonetheless, and we’re grateful and hopeful it can grow and prosper into something that is a lot more attractive.”

Finally, as chairman, McHenry would seek to expand the reach of the Gramm-Leach-Bliley Act of 1999, a federal law that allowed investment and commercial banks to combine, to add new personal data rules.

In June, McHenry unveiled a draft bill that would apply to financial institutions and “data aggregators,” which are businesses that collect, sell or share private consumer data. They would be required to notify customers they harvest their data and permit customers to tell them to stop doing so.

McHenry said he was open to compromise. “I look forward to continuing to work with my colleagues on this discussion draft to secure Americans’ privacy without strangling innovation,” he said in a statement.

Future leadership?

House Minority Leader Kevin McCarthy said he is leaning on McHenry to deliver a solid proposal on consumer data privacy. “Patrick is someone who will work on consumer policy and fiscal policy and anything,” he told CQ Roll Call.

Rep. Frank D. Lucas, an Oklahoma Republican, said a lot may be riding for Republicans on the outcome of McHenry’s committee agenda.

“Oversight will be key to what we do,” Lucas told CQ Roll Call. “By doing that, as well as passing legislation and spending, you play the long game. You show what you can do if you take back the White House because even if we get the Senate, you need 60 votes to do anything, and I don’t see that happening.”

Cole said he expects McHenry to succeed as committee chairman and can envision him returning to leadership in a greater role. “[Former Speaker] John Boehner mentioned in an article that McHenry could be a future speaker of the House, and I believe it,” Cole said. “He’s a genuine institutionalist.”

Asked to reply to Cole’s remark, McHenry demurred. “That’s kind of him,” he said. “I’m humbled, but right now I’m just focused on the tasks at hand.”

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