WASHINGTON — A fight is heating up this week over who will lead a key House committee as the new Republican majority forms its response to the still-struggling economy, the housing industry malaise and the tougher financial regulations it wants to curtail.
In one of the few contested leadership races among House Republicans, veteran Rep. Ed Royce of Fullerton has launched a rare public challenge to the lawmaker in line to chair the House Financial Services Committee, Rep. Spencer Bachus of Alabama.
The panel is expected to be a battleground in Republican efforts to scale back the sweeping financial reform law enacted by the Democratic-controlled Congress this summer.
The GOP has been particularly opposed to the new Consumer Financial Protection Bureau and strict rules over complex securities known as derivatives, which were partly to blame for the credit crisis that gripped the nation.
Royce's challenge, which if successful would add to California's clout in the new Congress, comes amid speculation that House Republican leaders are worried that Bachus isn't up to the task of leading a committee vital to their campaign promises to boost job creation and make government more business-friendly.
Among the concerns is that Bachus, a gentlemanly Southerner known for being quicker with a helpful campaign contribution than a sharp debating point, has had trouble holding his own in repartee with the acerbic-tongued outgoing chairman, Rep. Barney Frank (D-Mass.).
Frank was a major force behind passage of the sweeping financial reform law and will be the top minority member on the new committee. He looms as an obstacle in the public relations battle the GOP needs to try to roll back new financial regulations and restructure the housing finance system to end the bailouts of Fannie Mae and Freddie Mac.
The chairmanship will be decided soon by a vote of House Republicans based largely on a recommendation from party leaders.
The financial industry, consumer advocates and party members are watching the race closely, although not so much because Bachus and Royce differ on substance.
Both are conservative and want to end the Fannie Mae and Freddie Mac bailouts and change the financial reform law -- although they disagreed on the $700-billion bank bailout fund. Bachus joined most House Republican leaders in supporting it. Royce opposed it.
But the bigger difference is in leadership style and personality.
Bachus, 62, the frontrunner because of his service the last four years as the committee's top Republican, won support last week from seven senior committee Republicans who sent a letter to House leaders.
"It's hard to score points on Barney Frank. Everybody knows that. We've all tried," said Rep. Shelley Moore Capito (R-W.Va.), who signed the letter. "Spencer's a team player. He is very well-liked. I think he will do well at the helm."
But Royce, 59, whom some colleagues criticize as an opportunist, is running a surprisingly tough race.
"At a time when we're going to have to deal with the financial services industry -- we're going to have to figure out what the proper reform is -- Ed Royce would be a very, very good choice, in my opinion," said Rep. Dan Lungren (R-Gold River).
A former corporate tax manager, Royce has kept a low profile during his 18 years in Congress, loyally toeing the party line and raising hundreds of thousands of dollars to help Republicans win the majority.
In his bid for chairman, he has stressed his business background and his warnings a decade ago about the finances of Fannie Mae and Freddie Mac.
Royce said he's been "encouraged" by the response his colleagues have given him in private talks.
"This is about the need for strong leadership during a critical time for the capital markets and our economy," he said. "I think the committee would be better served if I were chairing it."
Royce has helped his cause by steering about $1 million from his campaign treasury to help elect fellow Republicans. A lawmaker's contributions are often taken into account when the party decides on leadership positions.
Bachus' Growth & Prosperity Political Action Committee gave about $350,000 to Republican candidates during this election cycle, and has given about $1.8 million to House Republican candidates since 2004.
Bachus declined to be interviewed but said in a statement that he expected to serve as chairman.
Bachus supporters said he has been more of a team player for the party.
Royce, on the other hand, criticized a Republican alternative for financial reform in June 2009 because it didn't include a national insurance regulator that could replace oversight by states. That did not sit well with his colleagues, said a Republican staffer, who requested anonymity.
Rep. John A. Boehner (R-Ohio), who is expected to be the next House speaker, has not yet taken a public position on the race.