(Bloomberg) -- A top Republican lawmaker wants
the GOP to move on from its nearly decade-long obsession with killing the
Dodd-Frank Act.
U.S. Representative
Patrick Patrick McHenry, a member of House Republican leadership and the GOP
front-runner to become the next chairman of the Financial Services Committee,
said his party should instead focus on legislation that will help prevent the
next economic crisis and addresses all the ways that technology is rapidly
reshaping banking.
Such policies might
draw bipartisan support, unlike efforts to gut Obama-era financial regulations.
“We need to get out
of this Dodd-Frank morass we’ve been in," McHenry said in an interview
Wednesday at his office in the U.S. Capitol. “The next crisis will look
different from the previous crisis, so we need to be forward-looking when it
comes to legislating."
Time
To Move On
Ever since former
President Barack Obama signed Dodd-Frank in 2010, Republicans and some financial
firms have sought to repeal the legislation or at least roll it back. But a
major overhaul requires 60 votes in the Senate.
In May, the GOP may
have gone as far as it can in revamping the sweeping legislation. Congress
approved a bill, backed by some Democrats, that mostly eases regulatory burdens
on smaller banks, not the Wall Street titans largely blamed for causing the
2008 crisis.
While that work was
important, McHenry said, his colleagues need to move on to other issues in the
next Congress if they want to get more laws passed.
Lawmakers have been
jockeying for months to lead the House’s powerful financial services panel,
which writes legislation impacting banks, hedge funds and stock exchanges.
Current Chairman Jeb Hensarling, a Texas Republican, has announced he won’t run
for another congressional term.
McHenry, the
committee’s vice chair, is seen as next in line to hold the gavel. But McHenry
has said he will wait until after the November elections to decide whether to
pursue it or seek a higher leadership position, such as House whip.
If Democrats wrest
control of the House, Representative Maxine Waters of California is in line to
run financial services panel. Waters has repeatedly called for President Donald
Trump’s impeachment and been one of Congress’s most vocal critics of big banks.
“I can work with
Maxine," McHenry said. “Maxine is going to have to make a decision,
though, on how she intends to operate. I think there have been some dangerous
comments she has made that I disagree with. She will then have to make a
decision whether or not she is going to be a policy maker or simply resist.”
In the next
Congress, McHenry said he hopes to continue his work on topics related to
financial technology, an issue he says has backing from Republicans and
Democrats. That could include tackling the question of how to regulate
cryptocurrencies, where McHenry said there’s a lot of "growth
potential," but also "a massive amount of fraud that is taking
place."
Coins
A Thorny Issue
McHenry said there
needs to be more rules around initial coin offerings and the trading of digital
tokens. One of the thorniest issues is determining whether coins should be
subject to the same stiff regulations that govern stocks.
Securities and
Exchange Commission officials have repeatedly argued that ICOs -- in which
companies raise money by selling tokens -- are securities that should be
regulated by the agency.
“Eventually
Congress will need to step in to provide clarity, there has to be a clear break
point between what is a security and what is a real world utility," McHenry
said. “We are not there yet but we need to make sure we are getting all the
data we can to be smart about how we legislate when it comes to crypto."
While he declined
to specify what exactly will prompt the next financial crisis, McHenry said
rising interest rates will be a factor.
“In a rising
interest rate environment, the pains of an institution becomes much more
ominous," McHenry said.
Selecting the next
committee chairman can be a lengthy process. Fundraising plays a role in
deciding who will be in charge, as committee chairmen are expected to raise
campaign money for themselves and their colleagues.
McHenry is one of
the most prolific fundraisers in Congress, having attracted $3.47 million since
2017, according to the Center for Responsive Politics. He has received $464,456
from the securities and investment industries. Still, he said the donations
haven’t influenced his policy views.
“There is no
mistake that there is money in American politics," McHenry said. “But my
decisions are not born out of financial contributions."
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