By Zachary Warmbrodt, Eleanor Mueller and Jasper Goodman

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The House is in crisis, and Financial Services Chair Patrick McHenry is tasked with picking up the pieces — again.

The North Carolina Republican is temporarily serving as speaker after the historic ousting of Rep. Kevin McCarthy, who had McHenry at the top of his list of hand-picked successors.

It’s a position that McHenry didn’t appear to seek out. He pursued the Financial Services chairmanship this Congress when he could have probably landed a GOP leadership role. Now it’s pretty clear why he made that call.

“No, I made my decision,” McHenry told reporters last week. “I want to run a committee, and that’s what I’m doing.”

A question now is what McHenry being called into service means for the big dreams he had going into this session — hopes of nailing down bipartisan support to “make law” on things like landmark cryptocurrency legislation. Time is of the essence: Under GOP rules, this is his last term at the top of Financial Services, and that’s raised questions about how much longer he might serve in Congress.

McHenry’s been pulled away throughout the year as one of McCarthy’s key lieutenants, helping deliver the speakership in January and then resolve debt-limit and funding stalemates. It all came to a head this week as McHenry tried to fend off a Republican revolt. It’s the latest example of the transition he’s made from self-described “bomb-thrower” to Wall Street’s go-to conservative adult in the room (which we document here).

Now he’s lost a powerful benefactor in McCarthy.

What’s next: McHenry and fellow Republicans have said repeatedly over the past week that he does not want to be the next speaker. But a number of Republicans and Democrats — with the possible exception of Rep. Matt Gaetz and other hardliners who would see him as McCarthy 2.0 — would love him in the job given the alternatives. (We’ll see if that sticks after he booted former Speaker Nancy Pelosi from her hideaway office.)

“I told him two weeks ago, as he will confirm, that if a Republican’s going to end up being the speaker, I hope it’s him,” Rep. Emanuel Cleaver, a senior House Financial Services Democrat, said in an interview after McCarthy was removed. “And then he said, ‘no.’ So I lobbied his wife. … I said, ‘talk to your husband. We’ve got to have him.’”

“He’s a conservative — and far more conservative than me,” Cleaver added. “But I think he’s a decent guy. He’s not mean-spirited or any of that stuff.”

According to fellow Republicans and other McHenry watchers, he is also probably well-liked by the rest of the potential House speaker candidates. So he might not have a hard time getting their buy-in on his priorities if he remains Financial Services chair.

The bigger question would be whether the House is so broken that it doesn’t matter anyway. Tough slogs on things like crypto and financial privacy will likely be even tougher.

McHenry knows well the perils of being recruited into service as speaker. Paul Ryan got the job after McCarthy’s candidacy imploded in 2015. Ryan retired after Democrats won back the House in 2018. (Ryan also encouraged McHenry to pursue committee leadership.)

“I would say we sort of tried that with Paul Ryan and that didn’t work out so well in Paul’s eyes or the conference’s eyes,” said Rep. Bill Huizenga (R-Mich.), one of McHenry’s Financial Services subcommittee chairs.

If McHenry gave up his committee chairmanship at some point, eyes would turn to his potential successors, including Reps. Blaine Luetkemeyer, French Hill and Huizenga. (Huizenga, for one, said last week that he’d be interested in the job.) Rep. Frank Lucas, the most senior Financial Services Republican, said Tuesday that McHenry would not have to give up his chairmanship during a temporary stint as speaker.

Right after his ouster on Tuesday, McCarthy huddled with McHenry, Hill and Rep. Garret Graves — another McCarthy lieutenant — in a small room off the House floor. When the quartet relocated to McCarthy’s office an hour later, McHenry didn’t respond to questions about who would be running Financial Services. Hill is the committee’s vice chair and has been a key player this year, playing a lead role in drafting crypto legislation and briefing members on the Silicon Valley Bank failure.

“I’m not making any comments right now,” Hill said.

Asked later if he would remain as Financial Services chair, McHenry said only: “Great question.”

Speaker pro tempore McHenry (or any other informed MM reader): What’s in store for you and House Financial Services?

And Wall Street folks, what’s your best-case scenario for how this House chaos pans out? Can any good come of it? Send thoughts and tips: Zach Warmbrodt, Sam Sutton.

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FDIC director Jonathan McKernan gives a keynote address at Mayer Brown’s Basel Endgame event at 10 a.m. … Fed board member Michelle Bowman discusses the role of data and analysis in banking reforms at the St. Louis Fed’s community banking conference at 10:25 a.m.

We’ll get to more House fallout soon. But first:

The CFPB’s SCOTUS surprise — The CFPB appears likely to avoid a devastating blow from the Supreme Court, per reporting from Josh Gerstein and Katy O’Donnell. Conservative justices on Tuesday expressed doubts about arguments from payday lenders that the agency’s funding stream is unconstitutional.

“Congress could change it tomorrow,” Justice Brett Kavanaugh said. “There’s nothing perpetual or permanent about this.”

Debt reality check revives volatility — The yield on 30-year Treasurys hit a 16-year peak on Tuesday, as markets adjusted to expectations of higher-for-longer interest rates and vast government borrowing needs, according to the FT. The shift dragged down stocks as investors bet on higher borrowing costs and sought less-risky returns in bonds, per the WSJ.

Former Boston Fed President Eric Rosengren warned Tuesday: “If long rates continue to rise, we are not out of the woods for additional banking problems.”

More jobs — Bloomberg reports that U.S. job openings increased unexpectedly in August, driven by a surge in white-collar postings.

No SBF jury yet — The first day of Sam Bankman-Fried’s trial adjourned without a jury being seated, according to CoinDesk.

Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of new episodes – click here.

A few more things to watch as House Republicans try to get their act together:

McCarthy will not seek the speakership again. Speaker contenders include Majority Whip Tom Emmer, one of Congress’ most outspoken crypto advocates. Majority Leader Steve Scalise is beginning to feel out support for the job.

How is Wall Street digesting the chaos? Finance executives at the Greenwich Economic Forum on Tuesday brushed it off, per MM’s Sam Sutton. “Hamster wheel,” said one family office investor. “Same old shit,” said another.

But other executives and analysts see potential economic consequences.

Political uncertainty is just one of a number of U.S. economic headwinds, in addition to rising bond yields and mortgage rates, a resumption of student loan payments and slowing employment, Unlimited Funds CEO Bob Elliott told MM.

“None of these things are a crisis in and of themselves, but they’re each another chink in the armor of the U.S. expansion,” he said. “And put together they have the real possibility of creating a turn in the economy.”

Wells Fargo senior economist Michael Pugliese is watching how the House leadership scramble impacts government funding talks.

“Where there is this much uncertainty, it’s easy to imagine a lot of different outcomes,” he said. “Whether a shutdown, or changes to spending levels that aren’t currently anticipated, or any number of policy changes that could shake out of this.”

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