Rep. Canseco uses banking background to fight against financial reforms

People get into politics for a variety of reasons. For Rep. Francisco “Quico” Canseco (R-Texas), the primary motivation was frustration with Washington. 

“I thought I could do a much, much better job than a lot of the things I was watching on TV. I got tired of throwing my slippers and shoes at [it],” he told The Hill. 

In his own words, Canseco got his “knees bruised” several times before finding electoral success. In 2004, he ran in Texas’s 28th congressional district, losing in a primary runoff. 

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In 2008, he campaigned in the 23rd congressional district, a constituency in southwest Texas that shares an 800-mile border with Mexico and contains the northern and southern portions of San Antonio. He was again defeated in the GOP primary. 

It wasn’t until the 2010 election that Canseco found his first victory in an upset over incumbent Democrat Ciro Rodriguez in the 23rd. 

Canseco had known other successes prior to his electoral adventures, however. 

Before winning the House seat — his first public office — Canseco had worked as an attorney, often representing banks and financial institutions. It wasn’t too long before he became confident he knew how to run one.

“I felt I knew how to work a bank, having been inside a bank, and managed the sale of [Union National Bank of Texas] in the early 90s,” Canseco said. 

The idea of a career in finance appealed so much to him that he decided to purchase a bank of his own. It took a year of negotiation, but in 1995 Canseco bought Hondo National Bank in Hondo, Texas, a small community bank in a town 40 miles west of San Antonio. 

The bank, 30 times smaller than Union National Bank of Texas, was failing with only a single location and $8 million in assets. But Canseco successfully turned the institution around. 

Today Hondo National Bank has more than $180 million in assets in several branches. Canseco says the experience he got managing a small bank, as opposed to a large one, taught him a valuable lesson.

“You don’t just purchase a bank and go in there and bring your paradigm … without taking account of what [is happening on] the ground, what goes on in that community.

The congressman, who sits on the House Financial Services Committee, sees Washington ignoring this lesson. 

Too often, the federal government tries to impose its own paradigm — totally unrelated to local conditions — by seizing on a calamity, he said. 

“One of the things that really frustrates me about Washington is that a crisis is [considered] an opportunity to go out there and legislate,” Canseco said.  

One piece of legislation drafted in response to a crisis especially draws Canseco’s ire: Dodd-Frank’s financial reforms, which Canseco characterizes as “overregulation, par excellence.”

“It was totally unnecessary. It was putting blame on a sector of our economy where blame didn’t really belong … [Banks] became the scapegoat of legislation that really wasn’t needed.” 

“It is overregulation, over-imposition on all of our … financial sector.”

To that end, Canseco sponsored H.R. 3044, a bill to repeal the Office of Financial Research (OFR), which he characterizes as a “behemoth of bureaucracy that seeks to gather information, no matter what kind of information that is.”

Canseco can recite a long list of the kinds of information pursuable by the OFR, including how much money someone is spending on a credit or debit card, the amount of debt an individual owes a bank, their payment history, the size of collateral and down payments, even the balance of a checking account. 

The law’s defenders say the purpose of gathering such information is to predict and avoid the next financial hurricane, such as the one in 2008 that sent the United States economy tumbling into The Great Recession. 

Canseco is skeptical. He believes that crisis decisions shouldn’t be left in the hands of federal government bureaucrats micromanaging from afar in Washington, but rather of those nearest to the problem. After all, he said, it’s their responsibility. 

“No matter how strong you are, you cannot predict that wind,” Canseco said of financial turbulence. “Whether it’s a shock of higher interest rates or lower interest rates … whether it’s a shock of a failure in the real estate economy, or crop failures … those things will all shake you up. 

“But it’s up to the board and it’s up to the management of that community bank to hold it up.”

Indeed, Canseco views the most recent financial crisis as a result of a popped real estate bubble and government interference in the mortgage market. Banks made loans under government pressure to high-risk individuals and families, loans they would not normally have made, he said. It was assumed Fannie Mae and Freddie Mac, government-sponsored enterprises, would pick up the slack.

“[The government put] pressure on banks to, say, make these loans and [then told them] don’t come whining because you can always sell it over here to my friends, Fannie and Freddie.”

This story was corrected at 1:19 p.m.