Joseph Otting, Comptroller of the Currency nominee for U.S. President Donald Trump, left, and Randal Quarles, governor of the U.S. Federal Reserve nominee for U.S. President Donald Trump, swear in to a Senate Banking Committee nomination hearing in Washington, D.C., U.S., on Thursday, July 27, 2017. Quarles and Otting will be the two most powerful U.S. banking regulators, setting them up to play leading roles in the Trump administrations efforts to roll back financial rules. Photographer: Andrew Harrer/Bloomberg
WASHINGTON — Nearly a year after taking office, President Trump stands on the precipice of having stocked the leadership positions of each of the federal banking regulators with his nominees, a first step toward enacting the deregulatory agenda he promised during his campaign.
The unexpected — if not wholly unanticipated — departure of former Consumer Financial Protection Bureau Director Richard Cordray over Thanksgiving weekend spurred Trump to install the White House Office of Management and Budget director, Mick Mulvaney, as the consumer bureau's acting director. After a brief power struggle between Mulvaney and Cordray’s hand-picked successor, Leandra English, a judge declared that Mulvaney was the rightful head of the agency until a permanent nominee was installed.
The following week, Trump tapped Fifth Third Bank’s chief legal officer Jelena McWilliams to head the Federal Deposit Insurance Corp., ending months of speculation about who the president’s choice would be to succeed Martin Gruenberg, whose term expired last month.
Unlike most executive departments, the regulators who oversee the financial system tend to be independent executive agencies. That means that a new president has a more limited ability to replace those leaders upon assuming office, but instead will only gradually introduce their own choices over the course of the first 12-18 months.
The Trump administration did not appear to be in a hurry, however, taking a rather deliberative approach to filling vacancies as compared to earlier administrations. But now that the cast of agency heads has been selected, what will each of the new leaders bring to their new offices, and how will they work together?
FDIC chair nominee Jelena McWilliams
Jelena McWilliams, who has been serving as chief legal officer at Cincinnati-based Fifth Third Bank since January, was named to succeed Martin Gruenberg as chair of the Federal Deposit Insurance Corp. last week.
Little is known about McWilliams' policy views, but she spent six years as a Republican staffer at the Senate Banking Committee, and before that served at the Federal Reserve Board. She's been known to carry a bound version of the Dodd-Frank Act for reference.
Her appointment raises many questions about where she stands on certain issues, including small-dollar lending and the industrial loan company charter.
The administration had initially forwarded former House Financial Services Committee staffer James Clinger as FDIC chair, but he withdrew for personal reasons in July.
Mick Mulvaney, director of the U.S. Office of Management and Budget (OMB), speaks during a House Budget Committee hearing on U.S. President Donald Trump's fiscal 2018 budget proposal in Washington, D.C., U.S., on Wednesday, May 24, 2017. Trump would dramatically reduce the U.S. government's role in society with $3.6 trillion in spending cuts over the next 10 years in a budget plan that shrinks the safety net for the poor, recent college graduates and farmers. Photographer: Andrew Harrer/Bloomberg
Acting CFPB director Mick Mulvaney
Mulvaney was a congressman from South Carolina before Trump named him to head the White House Office of Management and Budget in late 2016, taking office in February of this year.
But he was unexpectedly tapped by the President to step in as interim director of the Consumer Financial Protection Bureau — an agency he has been critical of in the past. He said Tuesday he is liable to serve in the role for five to seven months while a new director is nominated and confirmed, acknowledging that the process can take time.
Since taking office a week ago, Mulvaney has moved to consolidate control of the agency. He's temporarily banned hiring and policymaking and said he will review the more than 100 enforcement actions in the pipeline. He also said he plans to install political appointees across the agency.
Joseph Otting, Comptroller of the Currency nominee for U.S. President Donald Trump, listens during a Senate Banking Committee nomination hearing in Washington, D.C., U.S., on Thursday, July 27, 2017. Otting, who has served as OneWest Banks chief executive officer, would bring a lengthy resume working for banks that are overseen by the agency he's been tapped to run. Photographer: Andrew Harrer/Bloomberg
Comptroller of the Currency Joseph Otting
Joseph Otting, a former colleague of Treasury Secretary Steven Mnuchin at OneWest, was among the first nominees to be named by President Trump, but his confirmation took a back seat in Congress for most of the year.
Mnuchin replaced former Comptroller of the Currency Thomas Curry in May with industry attorney Keith Noreika, who served as acting comptroller until Otting finally succeeded him last month.
One key remaining question is where Otting stands on various policy initiatives begun by Noreika. Normally, interim agency heads are relatively quiet, but Noreika publicly feuded with the Consumer Financial Protection Bureau, suggested the bank holding company may be obsolete and called for a re-examination of the lines between banking and commerce. That has put a spotlight on Otting's own views on those matters.
Jerome Powell, chairman of the U.S. Federal Reserve nominee for U.S. President Donald Trump, waits to begin a Senate Banking Committee confirmation hearing in Washington, D.C., U.S., on Tuesday, Nov. 28, 2017. Powell signaled broad support for how the Fed operates, regulates and guides the economy, offering a full-throated defense of the government institution he's about to lead. Photographer: Andrew Harrer/Bloomberg
Federal Reserve Chair nominee Jerome Powell
Federal Reserve Gov. Jerome Powell was not considered a front-runner to lead the U.S. central bank when the Trump administration began.
But as time wore on he showed himself to be a team player and a welcome hint of continuity at an institution whose importance goes well beyond bank supervision.
Unlike the rest of Trump’s nominees, Powell’s name was forwarded to the Senate months before the position itself was open, ensuring a smooth transition atop the U.S. central bank when current chair Janet Yellen retires in February.
His nomination is scheduled for a vote in the Senate Banking Committee on Tuesday, where he is expected to be swiftly approved. Powell has also detailed his policy views, making him more of a known quantity than his colleagues heading the other agencies.
Federal Reserve Vice Chairman of Supervision Randal Quarles
Randal Quarles, Trump’s pick to serve as vice chairman for supervision at the Federal Reserve, was ultimately installed in October, even though Trump had leeway to make that pick as soon as he took office.
The administration vetted a number of candidates besides Quarles — who, incidentally, is a longtime associate of Jerome Powell — but Trump did not announce Quarles’ nomination until July.
Since taking office, Quarles has offered few details on how regulations would change, but he has said that fintech and cryptocurrency issues are among his strongest interests. On Friday, Quarles suggested regulators could help facilitate communication between institutions and the government about cybersecurity threats.
What about NCUA?
For credit unions, the notable absence on this list is the National Credit Union Administration.
Upon his inauguration, President Trump quickly promoted J. Mark McWatters from board member to acting chairman, later elevating him to chairman. Board Member (and former chairman) Rick Metsger continues to serve on the board, though his term formally ended in August. The board was already short-handed when the year began, and the president now has two seats to fill. Nominations for both seats were expected by year-end, but with just over three weeks left to 2017, it appears the board is likely to be a two-man operation for the foreseeable future.
The company's Silicon Valley Bank unit reduced its loan-loss cushion by $52 million. Private-equity and VC clients have warmed to the practice of doing deals virtually, which increases lending opportunities, SVB executives said.
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