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WASHINGTON, Oct 31 (Reuters) - Representative Jeb Hensarling, the Republican chairman of the U.S. House of Representatives Financial Services Committee, announced on Tuesday that he would retire from Congress at the end of 2018, marking the exit of Congress's leading advocate for rolling back strict financial rules.
Hensarling, 60, of Texas, said in a statement that he would not seek re-election, noting that his term as head of the banking panel expires at the same time. He has been a vocal proponent of significant deregulation in the financial sector and an author of sweeping legislation to drastically reduce the regulations imposed on banks.
"Today I am announcing that I will not seek re-election to the U.S. Congress in 2018," Hensarling said in a statement. "Although service in Congress remains the greatest privilege of my life, I never intended to make it a lifetime commitment, and I have already stayed far longer than I had originally planned."
Hensarling, first elected to Congress in 2002, had been the architect of a broad rewrite of the 2010 Dodd-Frank financial reform law. The overall would have eliminated several of the major powers given to regulators after the 2007-2009 financial crisis and impose strict new limitations on their authority.
That bill, the Financial CHOICE Act, is not expected to become law after passing the House, due to insufficient support in the Senate. But his work was hailed by GOP colleagues as an ambitious effort to cut regulation of the banking industry.
"Jeb has eloquently articulated this conservative vision, leading the charge to repeal Dodd-Frank and deliver a freer market that gives every American the opportunity to achieve the American dream," said House Majority Leader Kevin McCarthy in a statement.
Banking lobby groups, including the Financial Services Roundtable and American Bankers Association, said Hensarling had been a strong leader who advanced reforms that led to economic opportunity and better banking.
He has been a steadfast critic of rules imposed on the financial sector after the crash, and became an industry ally in efforts to roll them back.
But those efforts also made him a top target of advocates of stricter rules, who said his efforts would put Americans at risk of a similar meltdown.
"Hensarling has probably just decided to spend more time with his banks. We hope the revolving door doesn't hit him too hard on the way out," said Karl Frisch, executive director of Allied Progress.
While some GOP lawmakers have announced plans to retire after facing uphill re-election battles, Hensarling hails from a deeply conservative district in Texas where he remains highly popular. In 2016, he faced no Republican rivals in the party's primary and took 80.6 percent of the district's vote in the general election.
Even though the district consistently votes Republican, his resignation will provide another opportunity for Democrats to realize their hopes of taking control of the House in 2018. Lawyer Dan Wood, has already entered the race to be the party's nominee for the seat.
Unlike some exiting Republicans, Hensarling never publicly feuded with President Donald Trump. In fact, Trump had considered Hensarling for a post in his administration after the election.
His exit will set off a competition to take over as head of the powerful banking committee. Representative Patrick McHenry is the vice chair of the committee, but Representatives Blaine Luetkemeyer, Bill Huizenga, and Sean Duffy are also potential contenders, according to lobbyists familiar with the committee.
One lobbyist said Luetkemeyer was the leading candidate to lead the panel, as McHenry is seen as a rising star in House leadership.
Luetkemeyer is "seriously considering" running for the chairmanship, according to his spokeswoman.
Hensarling's next move is unclear. Some lobbyists speculated he could take a top role at a conservative think tank like the Heritage Foundation. Alternatively, he could take a role in the administration or return to his home state.
Cowen and Co analyst Jaret Seiberg said in a client note that Hensarling could be "the top contender" to take over the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac.
The current FHFA Director, Mel Watt, is an appointee of former President Barack Obama, serving out a term that expires in January of 2019.
(Reporting by Pete Schroeder and Lisa Lambert; Editing by Dan Grebler and Andrew Hay)