On December 12, the House Republican Steering Committee voted to name Rep. French Hill (R-Ark) as next chair of the House Financial Services Committee. Hill, a policy wonk who has represented the Little Rock area since 2015, beat three other long-time members of the Financial Services panel — Reps. Andy Barr of Kentucky, Bill Huizenga of Michigan and Frank Lucas of Oklahoma — in one of the most closely watched gavel races this year.
Chairman-Elect Hill arguably has a better grasp of financial regulatory policy than any House Financial Services chairman in a generation. Further, despite being a former banker, we view his primary area of interest and expertise as capital markets. Hill is particularly knowledgeable with respect to the broker-dealer industry, and routinely champions their interests over the interests of Registered Investment Advisers (RIAs). He is also close ally and strong supporter of the Financial Industry Regulatory Authority (FINRA).
In the past couple of years, Hill’s most visible contribution to the GOP’s policy work has been in the area of cryptocurrency and fintech; he served last session as the Chair of the HFSC subcommittee on fintech and was an architect of FIT-21. Nevertheless, Hill should not be viewed as a crypto-geek or someone likely to be distracted by shiny objects or the blockchain news: his expertise relates primarily to well-established and traditional financial services lines of business, and his remarkably solid knowledge and policy chops extend across all the HFSC’s primary areas of jurisdiction – from banking to housing to consumer lending, financial markets, and market participants.
While not an expert on the Fed, Hill has a well-honed understanding of the culture and purpose of central banks and will respect the Fed’s independence.
Hill is an ardent critic of the SEC’s Consolidated Audit Trail (CAT), and we expect this already beleaguered tool to be a focus of thorough oversight and scrutiny. He also understands the plumbing of the US capital markets – he knows quite a bit about exchanges, ATS platforms, trade execution and market structure.
Hill has international chops, having represented the U.S. as a negotiator in the historic bilateral talks with Japan known as the Structural Impediments Initiative (SII), and currently serving on both the House Foreign Affairs Committee and the House Permanent Select Committee on Intelligence. Neither a China-hawk nor a China-apologist, Hill is a realist.
We expect that he will outsource much of the HFSC’s international and national security portfolio to subcommittee chairs and that his approach to international financial policy will auger more toward expanding international markets than imposing economic sanctions.
In contrast to many of his GOP colleagues – including outgoing Chair McHenry – Hill is not overly or unrealistically enthralled with the promise of “small business capital formation,” and we consider him less apt to pursue a panoply of policy reforms in the spirit of the JOBS Act of 2012 than certain other senior GOP committee colleagues. Hill is, however, sophisticated in his knowledge of private markets, and his voice is likely to lend credibility and moderation to GOP policy initiatives in this area. Moreover, Hill is well known for his sponsorship of legislation to modernize the accredited investor definition.
Hill has also displayed a penchant for focusing on issues impacting older Americans, more so than many GOP chairs, and we expect he and his Senate counterpart Tim Scott (R-SC) to be more attuned to these issues than either of their GOP predecessors.
He is one of only a handful of HFSC member who truly understands policy issues relating to broker dealers and investment advisers, and he is not shy about discussing issues like examination frequency, arbitration forums and awards,
While the incoming chairman has only served in Congress for several terms and his legislative track record is somewhat limited, he is policy professional.
Moreover, Hill has displayed a willingness to work across the aisle when it suits his purposes – his inclination is to pursue consensus rather than score political points.
Overall, we view Rep. Hill as a formidable chairman. To the extent he is likely to confront challenges, we expect them to be center on the political responsibilities of the role, especially given the GOP’s narrow majority. Hill is largely in sync with his Conference, but he does not suffer fools. He is not enthralled or overly enthusiastic about certain of President Trump’s policy ideas, compared with other HFSC Republicans.
Affable, knowledgeable, and experienced, we expect Rep. Hill to have much more in common with outgoing HFSC Chair McHenry than prior GOP Chair Rep. Jeb Hensarling (R-TX) and we anticipate he will be more effective than either of his predecessors.
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