French Hill Takes The Helm

While federal lawmakers scramble to finish up their work for the 118th Congress, including legislation that would establish funding levels for the first part of fiscal year 2025 (and, therefore, avoid a government shutdown), the structure of the 119th Congress also is taking shape. In fact, last week House Republican party leaders revealed their choice to lead the Committee on Financial Services (HFSC): Rep. French Hill of Arkansas.

Rep. Hill had been vying with three other GOP lawmakers for the top position on the panel, which oversees banks and other financial institutions, financial regulatory agencies, international finance policy, and matters regarding economic stabilization, defense production, housing and urban development, and securities and exchanges.

Outgoing HFSC Chair Patrick McHenry (R-N.C.) praised Rep. Hill. “French’s experience in the private sector, the Treasury Department, and as vice chair [of the HFSC] have prepared him for this role,” Chairman McHenry said in a statement. “With French Hill at the helm, Republicans will build on our work from this Congress to finally enact a clear regulatory framework and robust consumer protections for the digital asset ecosystem.”

Who is French Hill, and what is his agenda for the HFSC likely to entail? Let’s take a look.

Who Is French Hill?
Rep. Hill is a ninth-generation Arkansan entering his sixth term as the congressman representing the state’s Second Congressional District. As Chairman McHenry noted in his statement, Rep. Hill currently is HFSC vice chair. In addition to that role, Rep. Hill chairs a subcommittee created at the beginning of the 118th Congress that oversees digital assets and financial technology. In the 118th Congress, he also has been a member of the House Permanent Select Committee on Intelligence and the House Foreign Affairs Committee.

Among Rep. Hill’s legislative accomplishments is the enactment of the Ukraine Reconstruction Act, a bill that allows for expedited seizure of high-value assets, including private jets, mega yachts, and real estate owned by Russian oligarchs who violated U.S. law, and a bill imposing sanctions on Syria. Rep. Hill also has championed legislation to address the opioid epidemic.

The congressman was once a staff member on Capitol Hill. From 1982 until 1984, he worked for Sen. John Tower (R-Texas) who, though chairman of the powerful Armed Services Committee, was a strong supporter of the banking industry. (Sen. Tower was later nominated by President George H.W. Bush to be U.S. Secretary of Defense. He was one of the few cabinet nominees ever voted down by the Senate.)

During his time on Capitol Hill in the 1980s, Hill also worked for the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

Before being elected to the U.S. House in 2015, Rep. Hill founded and ran Delta Trust and Banking Corporation, a nationally chartered bank that was based in Little Rock. In 2014, First National Corp., a community bank that first opened for business in 1907 in Strasburg, Va., acquired Delta in a transaction valued at approximately $66 million.

During President George H.W. Bush’s administration, Rep. Hill served as Deputy Assistant Secretary of the Treasury for Corporate Finance, where one of his key assignments was representing the United States as a negotiator in bilateral talks with Japan. After the fall of the Berlin Wall, Rep. Hill led the design of U.S. technical assistance to emerging economies of eastern and central Europe in the areas of banking and securities. In 1991, President Bush appointed Hill to be executive secretary to the President’s Economic Policy Council, where he coordinated all White House economic policy.

Starting Jan. 3, he will be one of the chief architects of economic policy for Republicans in the U.S. House of Representatives.

What Is On Rep. Hill’s Agenda?
In a statement issued last week after the Republican Steering Committee chose him to chair the HFSC, Rep. Hill said, “I look forward to working alongside Speaker Mike Johnson, Majority Leader Steve Scalise, Majority Whip Tom Emmer, House Republican Conference Chair Lisa McClain, and our whole leadership team as we work in tandem with President Trump and Senate Banking Committee Chairman Tim Scott to bring common-sense economic policies that will produce a new era of American prosperity shared by all our citizens across our land.”

While that statement is vague, we don’t have to guess what issues are top of mind for Rep. Hill as he takes over one of the most powerful committees on Capitol Hill.

That’s because, in a three-page document, he spelled out his wish list when he was running for the chairmanship.

First, Rep. Hill intends to focus on what he calls “regulatory fairness, transparency, and right-sizing.” Within this heading, Rep. Hill pledged that, under his leadership, federal financial regulatory agencies will no longer be able to “go after industries” that provide products like firearms and digital assets. Rep. Hill also said he would ensure climate stress testing is optional and that “instead of creating separate and unique climate-specific regulatory mandates, climate should be considered within existing frameworks such as credit and operational risk assessments, which prevents the need for overlapping and prescriptive regulatory measures.”

In other words: if you did not already think the U.S. Securities and Exchange Commission’s climate disclosure rule would die with the incoming Trump administration, Rep. Hill has made it clear nothing resembling that regulation will pass his smell test.

When it comes to providing oversight of federal rulemakings and their value, Rep. Hill indicated he will give financial institutions the benefit of the doubt. “The Federal prudential regulators should be open to innovation in a way that is consistent with safety and soundness and provide clear supervisory expectations to financial institutions about their third-party relationships including with financial technology companies,” Rep. Hill said in his statement of principles, which was issued in November. “This requires the agencies to be equipped with the necessary technical skills and expertise in order to understand and work with their supervised entities.”

Rep. Hill also said prudential regulators should periodically review “the cumulative impact of their regulations.”

Under the regulatory fairness heading, Rep. Hill also called for: withdrawing the Biden administration’s Basel III proposal, which would set international standards and minimums for bank capital requirements, stress tests, and liquidity regulations; increasing fairness, accountability, and transparency in the bank examination process; setting the threshold for Consumer Financial Protection Bureau supervisory authority at $10 billion; and enabling community banks to play more of a role at the Federal Reserve when it comes to setting policy.

A second principle that will guide Rep. Hill’s leadership is “promoting a healthy banking industry for intuitions of all sizes.” This priority makes sense since, as noted above, Rep. Hill is a former community banker himself.

Included in this heading, which Rep. Hill told Politico he will focus on during his first 100 days in office, are efforts to:

• Make sure any application for a bank merger or acquisition is deemed approved unless expressly denied by the federal banking regulator within 120 days of filing;
• Ensure the Federal Reserve defers to its regional banks on decisions whether to approve or deny a bank merger between small and/or mid-sized institutions;
• Allow non-bank capital sources to partner with qualified banks or bank executive management teams to be pre-approved for a “shelf charter” with the Federal Deposit Insurance Corporation (FDIC) as candidates for mergers and acquisitions transactions;
• Allow the FDIC to waive the Least Cost Resolution in the event of a bank failure;
• Make it harder for the FDIC to waive the national deposit cap rule for the acquisition of a failing or failed bank;
• Reevaluate the methodology for evaluating bank mergers;
• Raise the Small Bank Holding Company Policy Statement consolidated asset threshold in order to allow more community banks to grow using certain debt financing; and
• Increase the number of shareholders needed to qualify for a Subchapter S bank.

If you notice something is missing from that list, you’re right: crypto.

This week, Rep. Hill’s counterpart who will lead the U.S. Committee on Banking and Urban Development, Sen. Tim Scott (R-S.C.), very briefly previewed how the two would work together regarding digital assets. As Politico reported, Sen. Scott said the two have an excellent working relationship and that he “plans to follow through on pledges to create a digital assets subcommittee” similar to the one Rep. Hill runs in the House now. Sen. Scott did indicate he would like to see some changes to a digital assets bill approved by the House in May of this year.

For his part, Rep. Hill told Politico he wants digital asset legislation to be bipartisan. He, of course, played a major role in the 118th Congress crafting legislation that outlines a regulatory framework for digital assets. (The one that Sen. Scott wants to alter.)

In general, Rep. Hill’s ascension to HFSC chair is a win for the financial technology industry. As Politico concluded, “Few lawmakers have done more than” Rep. Hill “to woo Silicon Valley’s support on Capitol Hill.”