WASHINGTON - If Republicans hold the House in the November elections, Rep. Spencer Bachus could easily find himself leading the House Financial Services Committee.
The Alabama Republican says he has no goal other than to build consensus, and he pointedly contrasted this approach to that of his chief rival.
"It's not up to the chairman to set the agenda," Rep. Bachus said in an interview. "It's not up to the chairman to say, 'This is what we are going to work on.' It's up to the committee, the leadership, and in some cases the industry or consumer groups that come to us and say, 'This needs to be addressed.' ''
Rep. Bachus declined to take stands on several issues likely to resurface next year: Sarbanes-Oxley Act reform, the Basel capital accords, insurance reform, and data security.
"My philosophy on legislation is to talk to" all stakeholders "and in the process come to some conclusions and to some consensus," he said. "When it comes to a piece of legislation I try not to bring a lot of preconceived notions or do it just my way. I don't like to form legislation in a vacuum."
Rep. Bachus criticized those who do.
"I am amazed when a major legislation is filed in this body without any consultation with industry, regulators, the consumer groups, or other members of Congress - just 'this is what we're going to do,' '' he said. "I don't consider myself a know-it-all because the more you learn, the more you realize you don't know."
Rep. Bachus' comments appeared to be intended to differentiate himself from Rep. Richard Baker, the other Republican in the running for committee chairman.
The Louisiana Republican has more seniority on the committee than Rep. Bachus, but some industry lobbyists point to other factors in predicting that the Alabama Republican would win the chairmanship in a Republican-controlled House. As financial institutions subcommittee chairman for six years, Rep. Bachus has been well liked on Capitol Hill, and he routinely gives a significant chunk of his campaign funds to the Republican Party. He also backed Rep. John Boehner in his tight, successful race to become House majority leader.
But the leadership selection process is notoriously opaque, and the outcome depends on a variety of factors, particularly each lawmaker's relationship with top GOP leaders, including Speaker Dennis Hastert.
This article is the first of two examining what Reps. Bachus and Baker would focus on in the job. A profile of Rep. Barney Frank, who is expected to be House Financial Services Committee chairman if Democrats win control of the House, ran on Aug. 18. Other candidates are possible, including Reps. David Dreier or Deborah Pryce, if Republicans maintain control, but both have said they are not interested in the post. A decision is expected during the lameduck session of Congress this year.
For an hour-long interview, Rep. Bachus borrowed Rep. Boehner's spacious office (his was being refurbished) and consulted four staffers that he jokingly calls his "entourage." Casually sipping a drink through a straw, Rep. Bachus pondered his priorities.
"I would say to work with the industry, with the banking customers, with the administration and the Congress to both review and revise existing law and, if necessary, pass new legislation … and investigate," he said.
But he does have plans to tackle predatory lending and regulatory relief.
For the past year, Rep. Bachus has worked on a bill largely mirroring a North Carolina anti-predatory lending law that has won support from both banks and consumer groups.
"What the bill will say is that there's got to be a net benefit to the borrower and for the borrower there must be reasonable expectation that the loan can be repaid," said Rep. Bachus.
He will not reveal details of the bill other than to say it will define a loan as predatory if it is clearly to the borrower's detriment.
Rep. Bachus also reiterated previous comments that the Bank Secrecy Act is unduly burdening financial institutions and said he plans to push for more regulatory relief.
The federal banking agencies "are large buildings with a lot of people in them, and they are constantly thinking up new ways to regulate the industry, and most of them … are probably not necessary," he said. "Minimum regulation is the best approach."
Rep. Bachus drafted a bill that would let banks skip currency transaction reports on seasoned business customers. Banks file the reports for cash transactions bigger than $10,000, but Rep. Bachus said it is worthless to report on businesses that routinely deal in cash.
"In my mind it's unnecessary for banks to have to file all those reports that are never even read. And they are not read. They are not reviewed. They are stored," he said.
Rep. Bachus' approach was initially supported by the Financial Crimes Enforcement Network, and such a provision was included in the House regulatory relief bill passed in March. But the provision was removed after Senate leaders and law enforcement officials objected, and the regulatory relief legislation passed without it last month.
"We had worked out an agreement with Fincen for a proposal," but "you learn from your mistakes, and I think we made a mistake. Our mistake was not consulting with the Senate," Rep. Bachus said.
He used the example to illustrate how he would handle a similar issue in the future.
"My style would be to consult with the Senate and get their input before you publicly announce that you've come to a decision," he said. "If all you're interested in is passing it out of the House, it's not necessary. If you are interested in passing it on to the President, you need the Senate."
Rep. Bachus said he supports a legislative fix for the unintended consequences of the Sarbanes-Oxley Act, which he says is driving capital out of the United States to foreign markets, but he refused to outline particulars.
"There are people on the committee that want to scrap the law. I am not one of them. I think it is a good law that is in need of amendment and revision," he said.
Rep. Tom Feeney, R-Fla., introduced legislation in May that would exempt small companies from complying with Section 404 internal controls requirements. Rep. Bachus said he shared similar concerns during the debate over Sarbanes-Oxley, and observers speculate that the lawmaker would support a small-business exemption.
Rep. Feeney "and I identified some things that we didn't like about the bill and things we had concerns about and … [small companies] was one of the concerns at the time. The committee was opposed to our opinion, but … we'll revisit it," he said.
Rep. Bachus declined to discuss where he stands on efforts by Wal-Mart Stores Inc. and Home Depot Inc. to own industrial loan companies, though he appeared to support letting the Federal Deposit Insurance Corp. decide.
Asked if he has an opinion on the matter, Rep. Bachus replied, "Yes I do, but I'm not going to share it. … I mean, I have my views, but it's in their … court," he said.
Rep. Bachus is similarly circumspect on whether legislation is needed to create an optional federal insurance charter. He said there is a consensus the system needs to be reformed because 50 different state standards make it inefficient. But an optional federal charter lacks the necessary political support, he said.
"The insurance companies can't even agree. The industry can't agree. Consumer groups can't agree. The administration doesn't have a position, and I don't think there is a consensus in the Senate or in the House," he said. "There is a consensus that we've either got to push the states into some uniformity for faster approval of new products … or we've got to have an optional charter. Now I think that's a decision that's probably two or three or four years away."
A former trial lawyer who speaks with a slight Southern drawl, Rep. Bachus is described as approachable, "deceptively charming," and politically savvy. In the interview, he said he was inspired to get into politics after his state legislator opposed a repeat offender law for drunken drivers. "I ran against him, and I beat him," and Alabama eventually enacted such a law.
Rep. Bachus served four years in the state Legislature and four years on the state education board before defeating Rep. Ben Erdreich, a 10-year incumbent Democrat in 1992.
He is also an avid model train collector, inspired by his grandfather, who was an engineer on the Southern Railway. When a visitor takes a special interest in his collection, the lawmaker has been known to send one as a gift.
Several lobbyists said they appreciate Rep. Bachus' affable nature and receptiveness to different opinions but also view it as a double-edged sword. Since he vacillates among competing constituencies, his malleability can be a liability, some lobbyists said.
For example, though Rep. Bachus is considered a strong ally of the banking industry, and is credited for helping to pass deposit insurance reform, the Fair and Accurate Credit Transactions Act, and Check 21, he also has significant ties to the National Association of Realtors.
The group has consistently convinced Congress to bar banks from real estate brokerage, but retiring committee Chairman Michael Oxley adamantly supported banks on the issue. Rep. Oxley publicly chastised the Realtors trade group for using the appropriations process to thwart the Treasury Department finalization of a 2000 proposal that would have given banks realty brokerage powers.
But NAR views Rep. Bachus as firmly in its camp. Thomas Stevens, the trade group's president, said in February that the possibility of a Rep. Bachus chairmanship is the "light at the end of the tunnel." Rep. Bachus declined to discuss the issue.
He has also been known to lob some curve balls at the banking industry by occasionally supporting consumer protections they oppose.
During debates on data security legislation this spring, Rep. Bachus sent industry lobbyists into a mild panic when he suddenly suggested expanding a narrow provision that would let proven ID theft victims freeze access to their credit files.
Data security is likely to resurface in 2007, and Rep. Bachus declined to discuss the issue.
"If you asked me about data security and what I'd like to see in a bill, I wouldn't answer that question until I've talked to … [other committee members], among other things," he said. "I wouldn't go in there with a preconceived notion that 'this was how something ought to be.' "
Tomorrow: Rep. Richard Baker's priorities should he become House Financial Services chairman.
