Saturday, 28 Nov 2020

Trump plans to nominate bank watchdog in potential blow to Biden

WASHINGTON (BLOOMBERG) – US President Donald Trump signalled he intends to nominate the acting Comptroller of the Currency to a new five-year term, potentially complicating any plans the Biden administration has to impose tougher regulations on Wall Street banks.

In a Tuesday (Nov 17) statement, the White House said it plans to submit Mr Brian Brooks’ name to the Senate for confirmation.

The highly unusual move, coming just weeks before what’s likely the end of Mr Trump’s time in office, could force Mr Joe Biden to rely on never used legal authority to try to remove Mr Brooks if the president-elect wants to replace him with a tougher regulator.

Though the Office of the Comptroller of the Currency is a division of the Treasury Department, it’s outside of the Treasury secretary’s direct control.

Still, the law says a comptroller can be removed by the president “upon reasons to be communicated by him to the Senate” – a power that’s gone untested.

Most of the major regulations for US banks are written and approved in collaboration among the Federal Reserve, Federal Deposit Insurance Corp (FDIC) and the OCC.

Having Mr Trump people atop any of those agencies could have a major impact on how much rule-making could be done by Mr Biden appointees.

The FDIC is already expected to be run by Chairman Jelena McWilliams, a Trump appointee, until 2023 and Fed Vice Chairman for Supervision Randal Quarles can stay in his role until late next year.

The OCC was thought to be the only slot immediately open for Mr Biden to start remaking banking policy.

Mr Brooks doesn’t have much time to be confirmed before Mr Biden is sworn in on Jan 20. Mr Brooks would have to have a hearing before the Senate Banking Committee, followed by a vote by the panel and then a vote by the full Senate.

It’s unclear whether Mr Trump and Senate Republicans could organise all of that and marshal enough votes.

They’ve already been stymied in the controversial confirmation process of Fed board nominee Judy Shelton, as Republicans concluded Tuesday that they lacked sufficient backing to advance her nomination.

Mr Brooks, who became interim head of the OCC in May, has leveraged experience he gained at San Francisco-based Coinbase and other firms to push a financial technology agenda. He was also the former top lawyer and a board member at Fannie Mae.

“If confirmed, I will work ceaselessly to ensure the agency continues to fulfill its critical mission,” Mr Brooks said in a Tuesday statement. 

While the Fed is generally considered the most powerful of Wall Street’s regulators, the OCC has the most on-the-ground examiners working inside major banks.

It also imposes some of the biggest sanctions on lenders that are accused of violating rules. 

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