Lauch and load.

• Author: Gray, Tim
• Position: North Carolina junior senator Lauch Faircloth's activities in Congress

North Carolina's junior senator digs in to defend his turf - home to half of the nation's private mortgage insurers.

Last March, Lauch Faircloth went up against one of the U.S. Senate's most powerful members to protect a quartet of Tar Heel companies most people have never heard of. By year end, he was taking credit for the very bill he halted until it could be watered down and was being lionized by both the industry and the consumers the legislation was meant to protect.

The process illustrates not only how the system works in Washington but how North Carolina's junior senator, who spent most of his first term earning a reputation as a ham-fisted ideologue, has developed a deft touch for taking care of business while patting himself on the back. Which, in politics, is always a smart thing to do.

The issue was abuses in the mortgage-insurance industry. And like many things these days, it became pressing only after it appeared on television. Last February, NBC Nightly News broadcast a segment called "The Fleecing of America." Insurers, it warned, weren't telling mortgage holders they could cancel the coverage when equity in their houses reached 20%. Some homeowners kept paying premiums for years after the insurance could have been dropped. And few paid much attention to the $42 a month they paid, on average, for coverage, which pays off loans when borrowers default.

Two days later, Sen. Alfonse D'Amato introduced legislation that would have required automatic cancellation at 20% equity. Sensing an issue with appeal to voters, the New York Republican tried to rush the bill through the banking committee, which he chairs and on which Faircloth serves, and onto the full Senate floor for a vote.

But Faircloth swayed his fellow Republicans with a pitch both philosophical and practical. D'Amato's bill, he argued, smacked of over-regulation. What's more, it could lead to insurers refusing to cover some loans, which means some folks wouldn't be able to buy houses. It went without saying that the bill also would've cost the Carolina companies and the industry in general a bundle of money and a lot of hassle.

The committee deadlocked 9-9. Eight Democrats sided with Chairman D'Amato. The other eight Republicans lined up behind Faircloth. To get it out of committee, the chairman, famous for holding a grudge, would have to negotiate with the freshman. "Alfonse just didn't have the votes," Faircloth says, in his best aw-shucks manner. His colleagues looked at the bill, he says, saw its faults and made up their own minds to take some of its teeth out. That led to a chorus of amens and hallelujahs in the private mortgage insurance industry.

Darryl Thompson, president and CEO of Triad Guaranty Corp., says Faircloth understates his role. "Lauch is really the person who pulled together the Republicans on that committee and had a lot of conversations with our industry to come up with a bill we thought was reasonable."

It's no surprise the industry had his ear. Four of the nation's eight private mortgage insurance companies are headquartered in North Carolina - Triad Guaranty and Republic Mortgage Insurance Co., both in Winston-Salem, United Guaranty Corp. in Greensboro and GE Capital Mortgage Insurance Co. in Raleigh - and they control half the PMI market. They also employ 1,200 Tar Heels. And their CEOs and trade association have contributed generously to...