WASHINGTON — The Senate may have been the easy part.

One day after the upper chamber passed a regulatory relief package, top House Republicans insisted that they plan to be involved crafting a final banking bill before it heads to the White House. That raises fresh questions about how quickly the most likely set of reforms since the Dodd-Frank Act can become a reality.

Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee, told reporters Thursday that he is not ready to move forward on the Senate bill as it stands.

Rep. Jeb Hensarling, a Republican from Texas and chairman of the House Financial Services Committee.
“We are not rubber-stamping the Senate bill, so we’re sending a message to the Senate that we stand ready to negotiate,” said House Financial Services Committee Chairman Jeb Hensarling of the regulatory relief bill. Bloomberg News

“We are not rubber-stamping the Senate bill, so we’re sending a message to the Senate that we stand ready to negotiate,” he said.

The Senate bill, sponsored by Banking Committee Chairman Mike Crapo, R-Idaho, passed with bipartisan support following months of careful negotiation with more than a dozen moderate Democrats. But the delicately crafted deal, which makes targeted reforms of Dodd-Frank but leaves the law's basic frameworks in place, may not be enough to satisfy GOP members in the House.

"I've talked to colleagues both on the [House Financial Services] committee and off the committee who look at this and say, why in the world is this viewed as a ceiling, not a floor?" said Rep. Bill Huizenga, R-Mich., who joined Hensarling at the press briefing.

Any changes that expand the regulatory relief bill could pose new complications if it forces moderate Democrats in the Senate, who have already faced criticism for supporting Crapo's from within their own caucus, to sour on the deal.

Most analysts still believe the odds favor the bill becoming law, but they warn that the process in the House could slow things down, delaying enactment.

“We could go through two or three months of the Senate and House playing a game of chicken, but I think they will eventually reach an agreement and get a bill by the end of June,” said Ian Katz, a director with Capital Alpha Partners.

The Senate bill exempts community and regional banks from a number of Dodd-Frank rules, most notably raising the asset threshold — from $50 billion to $250 billion — under which "systemically important" banks face enhanced supervision. But House GOP lawmakers are eager to have a chance to put their mark on the effort.

Hensarling has laid out a list of roughly 30 House provisions with bipartisan backing that he said he would like to include in discussions with the Senate. Among those measures are proposals that have received broad backing in the House, such as one involving Securities and Exchange Commission registration of certain brokers working with small businesses, which won a unanimous floor vote, as well as more controversial items.

One hotly debated proposal by Rep. Blaine Luetkemeyer, R-Mo., would remove any asset threshold for “systemically important” banks, requiring regulators to instead consider multiple factors, such as interconnectedness, in making designations. The Senate bill took a different approach, raising the current threshold while giving regulators the discretion to label banks with assets of $100 billion to $250 billion as systemically important.

“We’re attempting to negotiate bipartisan provisions — we’ve already submitted a list,” Hensarling said. “There is some language in their bill that we wish to negotiate as well, but again, we are attempting to limit it to bipartisan items.”

The chairman wouldn’t elaborate on what specific language in the Senate package he’s looking to change.

House lawmakers at the briefing underscored the need for the chamber to play a role in negotiating a final deal.

"We come today with … some bipartisan ideas in the Senate that they believe will help move credit to consumers, reduce regulatory burdens for less complex, small community banks. And we congratulate them. But why would we not also allow our members in the House, Republicans and Democrats, to add their best ideas on the same basis?" said Rep. French Hill, R-Ark., at the press briefing.

Hensarling also emphasized that his approach of pushing for changes to the Senate bill has the backing of House Speaker Paul Ryan and that the regulatory relief bill is “staying on the speaker’s desk unless or until [Senate lawmakers] negotiate with the House.”

The chairman indicated he would be open to either a formal conference with the Senate or more informational negotiations with Crapo and others who worked on the package.

Yet crucially, none of the House lawmakers at Thursday’s meeting provided a time frame for negotiations, leaving the banking industry and other observers to guess about when the House might act.

Jaret Seiberg, an analyst at Cowen, said in a note to clients Thursday morning that he expects the House to “take its time in considering the bill.”

“This could both help with fundraising and perhaps lead to an agreement with Senate Democrats to add a few more items to the package,” he wrote.

Still, the more discussions push into the summer and fall, the more the issue is likely to become tied up with the November elections, complicating the political calculus for all involved.

Observers said they expect lawmakers to be focused on the issue in the weeks ahead to see if a deal can be reached, as the banking industry continues to exert pressure on Congress to come to an agreement.

“It will be key to watch if
and House leadership gets involved further in this negotiation,” said Brandon Barford, a partner at Beacon Policy Advisors.

Doing so could suggest “they want to ensure the bill passes” and that they might have concerns that the chairman’s hard-line tactics could derail a deal, he added.

A spokeswoman for Ryan said in a statement that his office is "working with Chairman Hensarling and our conference to determine next steps, and all options are on the table to ensure that common-sense bipartisan House solutions are included in a final bill."

"It’s an absurd assertion that some are making that this is 'blocking' the bill. We are seeking to strengthen it with bipartisan measures. That’s not 'blocking' the bill," she added. "This is how a bill becomes a law. The Senate passing a bill is one step, not the final/only step."

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