Tales from the Trail

It is clear that House Financial Services Committee Vice Chairman Jeb Hensarling is proud of his credentials as a fiscal conservative.

He may have more competition for that label after the November election swept in members of the Tea Party. But he sees that as a good thing.

Hensarling eased into the position of  House Republican Conference chair after avoiding an internal battle for the fourth highest slot in House Republican leadership when Michele Bachmann, who started the congressional Tea Party Caucus, stepped aside.

We asked him at the Reuters Future Face of Finance summit how his Tea Party colleagues are fitting in on Capitol Hill.

"I guess well. We wouldn't have the majority were it not for the Tea Party. I think most Republicans embrace the core message of the Tea Party," Hensarling said.

Our Washington bureau interviewed regulators and lawmakers at a Reuters finance summit today.

Deputy Treasury Secretary Neal Wolin told us he did not see any national security concerns with Deutsche Boerse’s planned takeover of NYSE Euronext.

FDIC Chairman Sheila Bair said America’s big international banks should restructure their operations unless they can prove that they can easily be broken up if they start toppling during a financial crisis.

The wrangling continues over the Bush-era tax cuts. President Barack Obama said he was confident Democrats and Republicans could break the deadlock and reach a deal soon. But with time running out, there is something of a game of chicken being played by the two sides. Each is watching to see who blinks first, and with the economy still struggling, both know the stakes are high.

Texas Republican Congressman Jeb Hensarling warned of the risks of failure:  “In a lame duck session, a lame duck Congress should not turn our economy into a dead duck economy.”

Let’s just hope they don’t duck the issue.

Here are our top stories from Washington today…

White House memo outlines new anti-leak measures

The White House has set up a special anti-WikiLeaks panel after the embarrassing flood of State Department cables leaked by the website, and its proposals include teams of inspectors who would prowl government agencies looking for ways to tighten security. A four-page draft memo circulated by the White House says President Obama’s national security staff has created an “Interagency Policy Committee for WikiLeaks.”

What’s going to fly?

That’s the question on Capitol Hill where Republicans and Democrats are engaged in a game of chicken over what legislation gets approved in  the final stretch for this Congress. 

Everyone wants to extend middle class tax cuts, but when it comes to extending tax cuts for wealthier Americans feathers get ruffled. Republicans are demanding all of the Bush tax-cuts be extended, but Democrats cry fowl, saying the tax cuts for the wealthy are too expensive to continue.

The House of Representatives, which is controlled by Democrats until the new Congress with a Republican majority is seated in January, will vote Thursday to extend only the middle-class tax cuts that are set to expire at the end of the year.

There will be no showdown at the GOP corral. (For now anyway).

Congresswoman Michele Bachmann, a Tea Party potentate, decided to step out of the ring . And so evaporated the potential for a high-profile internal duel for House Republican Conference chair, the fourth highest position.

Bachmann in July started the Tea Party Caucus as the conservative movement was gaining momentum ahead of the November elections. Republicans seized control of the House of Representatives in those midterms which also brought wins to Tea Party candidates who will want to flex their muscles in the new Congress.

But Bachmann’s decision has staved off what could have been high-level drama when Republicans pick their leaders next week.