Rep. Frank D. Lucas knows he’s the likely underdog in the now four-man race to replace Patrick T. McHenry as the top Republican on the House Financial Services Committee, but he isn’t letting that stop him.

The Oklahoma Republican jumped into the race this month, saying it’s the logical conclusion of his nearly 30-year panel tenure. He brings an emphasis on traditional banking policy issues and a cautious tone on cryptocurrency to the race. And he said he’s facing off against three of his “very favorites,” Reps. Andy Barr of Kentucky, French Hill of Arkansas and Bill Huizenga of Michigan, all current subcommittee chairs with strong fundraising records.

“In my career as a legislator, in my career as a candidate, I’ve often been underestimated by lots of people. I don’t mind that. People can underestimate you as long as you overperform,” Lucas said in an interview. “We’ll see if I’m capable of overperforming one more time.”

Lucas pointed out that the race, whose outcome will be determined by the Republican Steering Committee after the election in November and the conference picks its leadership, is a long way from the finish line. He faces strong opponents, but anything could happen between now and then.

“Honestly, who knows at this moment what that world will look like?” he said. 

In the meantime, Lucas, who has chaired the House Agriculture Committee and now has the House Science, Space and Technology gavel, is pitching himself as someone with experience at the helm of committees, mentoring younger members and working across the aisle when consensus is possible.

‘Maintain the fundamentals’

A fifth-generation Oklahoman who grew up on a farm that has been in his family since 1912, Lucas joined the Financial Services Committee during his first term, back when it was called the Banking and Urban Affairs Committee. 

He said he was drawn to the panel because of its jurisdiction over the cost and availability of capital, a key issue for his district, which covers about 34,000 square miles across Oklahoma’s western half. 

“I’m an ag district at home. I’m an energy district. I’m Main Street. I’m manufacturing,” Lucas said. “All capital-intensive industries in a capital-starved state.”

Lucas said he would emphasize lending and capital — bread-and-butter banking issues — if he gets the gavel, something of a departure from the panel’s previous two chairs.

McHenry, R-N.C., the current chairman, who is retiring at the end of his term, has a reputation for tackling new technology and emerging issues, most notably regulating cryptocurrency and updating financial data privacy protections. 

The panel’s top Democrat, Rep. Maxine Waters of California, used her time as chair to shine a light on housing issues.

“There’s a tendency in Congress to want to play with whatever the shiniest, brightest new toy is. But if you don’t maintain the fundamentals in, call it your jurisdiction or call it the economy, then you’re setting yourself up for future problems,” Lucas said. “I might have more of a focus on the traditional issues: cost of and the availability of capital. It doesn’t mean that I’m going to ignore problems or I’m going to ignore new facets of the industry that evolve.”

The disappearance of community and regional banks is a big concern, Lucas said, adding that it’s an issue where Republicans and Democrats can find common ground.

“In the traditional banking department, by policy intentionally or unintentionally, the number of actual chartered banks out there is collapsing dramatically. I think we should have more competition in the financial services realm, not less,” he said.

The number of federally insured banks and savings institutions was cut roughly in half from 9,354 to 4,706 banks between 2002 and 2022, according to Federal Deposit Insurance Corporation data that predates some prominent 2023 bank failures and the ensuing spike in deposit flight to the biggest banks. 

Lucas is up against an opponent who has direct experience in the banking sector. Hill was the founder, chairman and CEO of Little Rock, Ark.-based Delta Trust & Banking Corp. The sale of Delta Trust in 2014 illustrates a major reason behind the decline in smaller banks: mergers and acquisitions.

The decline of local banks has implications for Lucas’ agriculture-dependent district. About 77 percent of agricultural loans and more than half of small-business loans originate with community banks, according to a 2015 study from the Harvard Kennedy School of Government.

Lucas said he could work with Waters, whether she’s chair or ranking member, to find common ground on encouraging community banking, especially to increase the diversity among ownership of smaller banks.

“We’re going to disagree on 90 to 95 percent of the policy issues. But we’re not going to be, I believe, disagreeable,” Lucas said of Waters. “And we’re going to work — I believe in whichever role things are found out to be — on achieving consensus on the issues that reflect my first goal: the cost and the availability of capital.” 

The committee could face even more urgent business in the banking sector next Congress if the commercial real estate market continues to deteriorate and banks are left holding the bag, Lucas said. 

Regional banks, the same banks whose decline already poses a concern for Lucas, are more exposed to commercial real estate than their bigger counterparts.

‘Crypto is still the Wild West’

Lucas acknowledged the committee will have to address cryptocurrency regulation early in the 119th Congress if McHenry doesn’t get his package across the finish line by the end of the year. 

“Crypto’s important. It’s real. It is with us. It’s not going away,” Lucas said. “And we need to have rules and regulation structure. We also need to be mindful about ever-changing technology.”

Like other Republicans on Financial Services, Lucas says Congress must pass legislation for the regulation of cryptocurrency, contrasting with top committee Democrats who say the Securities and Exchange Commission already has the authority to oversee the space. 

But Lucas is more wary of cryptocurrency than many GOP colleagues.

“Crypto is still the Wild West,” he said, a comment similar to statements by SEC Chairman Gary Gensler, who has sought to bring the cryptocurrency sector to heel. 

“I have constituents who come to my public town hall meetings who are very enthusiastic about crypto because they view it as a way to move their resources, their wealth, their money, however you want to describe it, around in a way that neither the banks, nor the Treasury, nor the IRS can keep track of,” Lucas said. “That same principle also creates opportunities for nefarious people. So there has to be some form of regulation.”

Advances in computing could also pose security risks to cryptocurrencies, which rely on encryption to function, Lucas added.

Underdog

Lucas is a relatively late entrant in the race. He is the longest-serving Republican on the panel and second only to McHenry in seniority. But as chairman of the Science, Space, and Technology Committee, Lucas was barred from leading a Financial Services subcommittee this Congress. He also lags well behind his three rivals in campaign fundraising. 

Lucas has raised $835,700 so far this cycle, according to Federal Election Commission data. He raised $1.5 million for the 2022 midterms, less than half the amount each of his opponents raised last cycle. Heading into November, Barr leads the pack on fundraising with $2.6 million, followed by Hill with $2.2 million and Huizenga with $1.9 million.

Lucas dismissed his anemic fundraising numbers. 

“The resources follow the position,” he said. “Now that I’m in the race, we’ll see how that affects the fundraising mixture for all of us. But I’m not concerned about that. Whoever prevails will meet their obligations at the NRCC [National Republican Congressional Committee].”

The Steering Committee will consider a range of variables in picking McHenry’s successor, including seniority, regional balance among committee leaders across the conference, legislative track record and relationships with leadership. 

But fundraising numbers are crucial, and the Financial Services panel is traditionally seen as a plum opportunity given the deep pockets of the sectors it oversees. 

“I have faith in the people who know us well to make a wise decision,” Lucas said. “And those kinds of people don’t respond to contributions. They understand what’s at stake.”