Diary

The Hensarling Model: Crony Capitalists' Worst Fear

“I want to move us away from the Washington insider economy,” Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, told the Wall Street Journal in 2013.

If the last few years show anything, it’s that he means it. Although many Republicans favor their own, “pro-business” forms of government intervention, Hensarling has consistently advocated on behalf not of any special interest, but for the free market that benefits all of us.

You probably aren’t surprised to learn that’s a mark of distinction in Washington, and one that lobbyists have sometimes chafed at. Hensarling was one of the leading opponents to renewing the Export-Import bank, an institution that economists see largely as a market distortion but has heavy backing from the U.S. Chamber of Commerce and lots of other powerful people. And in 2008, he loudly opposed the $700 billion bailout during the financial crisis.

The Texas Republican’s latest fight pits him against Sen. Dick Durbin (D-IL) and tens of millions of dollars in lobbying by the retail industry to use the government to set prices on credit card “swipe fees.”

Democrats, led by Durbin, set the price controls in 2010 when they were at the height of their power in the Obama era. Since then, the law has taken an estimated $36 billion from one set of companies and handed it to another – the set that had more politicians in its pocket when the votes were counted.

Five years after the rules went into the effect, Durbin and the retail lobbyists are, outrageously, back at the trough for more, claiming that the government needs to set the price even lower than it did before.

In June, Hensarling released a draft bill instead to repeal the price controls, noting that studies since the 2010 law show that stores benefiting from the price controls have not passed any of the savings on to consumers in the form of lower prices.

The law that set the price controls, Dodd-Frank, also instituted thousands of new rules and regulations. One law firm estimated its regulations, when finished, will exceed the length of 28 copies of War and Peace.

“Instead of ending ‘too big to fail,’” it’s “created ‘too small to succeed,’” Hensarling said in July. The costs of complying with all the new red tape is especially tough for smaller companies. For example, credit unions – typically small, traditional non-profits – have been ravaged by the law, with over 20 percent of all credit unions folding since its enactment.

“Only Washington would claim Dodd-Frank is somehow a ‘consumer protection’ law,” Hensarling said. “Under Dodd-Frank, the number of banks offering consumers free checking has been cut in half, the law’s regulations have fueled a surge in customer fees and cost increases for credit cards and auto loans, and community banks across the country find it harder to offer mortgages.”

In 2010, Hensarling stared Barack Obama down at an unexpected Q&A session, delivering a blistering rebuke of the reckless deficit spending he had proposed, leaving Obama stammering and repeatedly referring to him as “Jim,” not “Jeb.” He wasn’t the first liberal to lash out at Hensarling for a principled stand: Democrats during the ill-fated “supercommittee” negotiations in 2011 viciously attacked him when he would not cave and back higher spending and taxes.

He’s also the Republican that makes lobbyists nervous, because he’s not on their “team.” He’s on ours. It’s that type of leadership that should have every conservative rooting for him as he takes on Durbin and the big box stores and whatever else comes next.