This article is from the archive of our partner National Journal

Rep. Jeb Hensarling is finding out that advancing the cause of free enterprise comes at a price.

The chairman of the House Financial Services Committee and former Republican Study Committee head rose to prominence touting populist conservative principles at all costs. Yet in order to advance his policy goals as he nears the end of his first term with the gavel, he will have to bargain, both within his own party and across the aisle.

Hensarling—who has mulled running for a top leadership post but now appears focused on his committee work—has made eliminating the federal government's role in insuring corporate interests a central plank of his chairmanship. That bent has predictably irked Democrats, but even some in his party say he has made little progress to that end, instead letting critical bills pile up on the committee's docket in favor of remaining ideologically pure.

Hensarling, for his part, said in an interview that he will judge his progress at the end of his full six-year tenure as chairman, not at the end of the first term. Hensarling allies say his strategy from the start was to begin with the most conservative bills possible in order to stake out favorable negotiating positions.

"I play a long game," Hensarling said. "I'm proud of what this committee has accomplished. We've got a little bit more work to do in the lame-duck session."

Hensarling will indeed be tested on that during the lame duck, and again in the next Congress. First, he will have to negotiate an extension of the Terrorism Risk Insurance Act, which offers a federal backstop to large businesses and sports arenas against the financial risk of terrorism. Then he will be faced with an expiring authorization of the Export-Import Bank, which props up companies who export U.S. goods, and has become a symbol of corporate welfare to many on the right.

Hensarling has said that he would rather phase out both programs, a position unpopular in Congress as a whole, but that he will work to extend terrorism insurance while finding a way to rally support behind ending the Ex-Im Bank. Compromise, however, is something that does not suit the 57-year-old Texan, many in his party said.

"His mentor, Phil Gramm, was as ideological as they get. He also knew how to cut a deal. So I hope that he studied both sides of that," said one Republican member of the Financial Services Committee, who asked for anonymity to discuss his concerns freely. "So I hope he doesn't let the perfect become the enemy of the good, because there are good reforms we can make."

Last Wednesday, Hensarling reluctantly cast his vote in favor of a stopgap spending bill that included an extension of the Ex-Im Bank, an extension he helped craft in private meetings with Speaker John Boehner and Majority Leader Kevin McCarthy. The bank's charter now extends through June 30 of next year, while the spending bill expires this December. Hensarling said decoupling the issues will allow for a real debate about the bank, without the stigma of a government shutdown.

"I think it is important that Ex-Im have an opportunity to stand or fall on its own," he said. "I'm at least encouraged that members want more time to consider the arguments."

Those worried about his posture saw the vote as a good first step, but one still met with unease for the future. In fact, Rep. Stephen Fincher, a member of the committee, is circulating a draft proposal to fully extend the bank with some reforms.

Frustration with the chairman started bubbling to the surface last year when a flood-insurance reform measure seen as critical to many GOP elections was stripped from his jurisdiction. Leadership wanted to patch a law to avoid premium increases on homeowners living in flood-prone areas. Hensarling, meanwhile, wanted to privatize the industry entirely.

Hensarling put forth several legislative ideas, but then-Majority Leader Eric Cantor, sources said, was worried Hensarling could not muster support in the conference, and instead struck a deal without his input. Republican members said they were put off by the chairman's inability or reluctance to find a compromise position on an issue that could cost the GOP individual elections. Sources close to the committee said leadership should have given their ideas more backing.

Later in the Congress, Hensarling spearheaded a bill that would phase out Fannie Mae and Freddie Mac, massive government-sponsored enterprises that invest in the secondary mortgage market. His bill passed the committee, but went no further as leadership made the calculation that the legislation could not pass the full House.

Hensarling instead blamed the stall on the Senate's slow work on passing their version of the bill, leaving little time at the end of the Congress to pass a conferenced product.

Nevertheless, Republicans on Hensarling's committee noted that those two experiences ultimately cut them out of the process of reforming either federal program, especially frustrating for those Republicans who would settle for incremental changes so long as they helped craft them.

"I would like to see him as more of a consensus builder," said a second GOP member on the panel. "Getting past the committee, if that's your ultimate goal, then so be it. But I think that making it become substantive law is going to require reaching across the aisle—and quite frankly reaching across our side of the aisle—to make sure that you get enough support to get it over to the Senate. I'm not so sure we're on that course."

Others, however, have come to believe Hensarling does indeed have a long-term strategy, an idea buoyed by the Ex-Im Bank extension unlinked from spending decisions. Those in the financial services industry are so jarred by his intractability that they may be more inclined to swallow a terrorism-insurance deal closer to his version, those sources noted.

"Jeb has grown on me," said a third Republican on the committee. "I frankly think he's one of the few chairmen who is navigating and leveraging the negotiating process to his favor. We haven't seen the win yet, but I think you'll see a lot of wins in the next Congress based off the work that Jeb has done."

That could be especially true if Senate Republicans win control of their chamber.

"Hope springs eternal," Hensarling said. "I've already had a number of conversations with Sen. [Richard] Shelby, who might, and hopefully will, be the next Senate Banking Committee chairman, and we have had preliminary discussions about what he would like to achieve."

Hensarling has had some success on smaller issues, as the Financial Services panel has approved several regulatory relief bills—many of them bipartisan—that have been passed by the full House.

And despite his divisions with leadership, Hensarling has some well placed allies. At a Thursday appearance at the Financial Services Roundtable, Rep. Paul Ryan, who is very close to Hensarling, tried to put industry executives at ease. He told the group to work with Hensarling rather than fight him on an extension of terrorism insurance.

Ryan's is an example Hensarling said he models his own struggles after. "The first time he introduced his Medicare reform plan he had all of 12 Republicans" supporting it, Hensarling said, noting that he was one of them. Now, most Republicans routinely vote in favor.

This article is from the archive of our partner National Journal.

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