10 banking policymakers to watch in 2020

WASHINGTON — With the impeachment of President Trump still dominating the capital, the policymaking environment in 2020 does not favor much movement on financial services policy.

But banks still want lawmakers to pass pot banking and anti-money-laundering reform. The financial regulators, meanwhile, are still poised to move forward on modernizing the Community Reinvestment Act, administrative steps to prepare Fannie Mae and Freddie Mac to exist conservatorship, and other measures.

Here are the lawmakers and regulatory leaders who will drive the financial policy debate in 2020.

CFPB Director Kathy Kraninger
CFPB Director Kathy Kraninger
The head of the Consumer Financial Protection Bureau will stay front and center as the agency develops new regulations affecting payday lenders, debt collectors and mortgage underwriting, and faces sharp criticism from congressional Democrats over the extent of her agency’s enforcement activities.

But the biggest question facing the CFPB in 2020 may be the constitutionality of the agency itself as a Supreme Court showdown is set for March over the ability of a president to fire the agency’s director. The Dodd-Frank Act allows the president to remove the agency’s chief only “for cause,” but many — including Kraninger herself — believe that provision affords the CFPB director too much power.
Comptroller of the Currency Joseph Otting
Comptroller of the Currency Joseph Otting
As he enters the third year of his term, Comptroller of the Currency Joseph Otting will continue to make policy waves.

Since entering office, Otting has displayed a penchant for going his own way. One major milestone is behind him: the issuance of his agency’s proposed reform plan for the Community Reinvestment Act. But with Democratic lawmakers, community groups and the Federal Reserve opposing the plan, the battle over CRA reform will likely intensify over the next 12 months.

Also on the agenda for the Office of the Comptroller of the Currency is the continued legal battle over the agency’s special-purpose fintech charter, courtesy of state regulators. Legal questions about the charter and reservations by fintech firms about the process has resulted in the agency not receiving any applications. But fintechs, which now must play by rules of individual states, have not let go of their desire to streamline their licensing.

Otting also made streamlining the OCC itself a priority when he took office, and since then the OCC has managed to cut costs and has reduced fees for supervised banks two years running. The comptroller could take further steps to change the OCC’s processes in 2020.
FDIC Chairman Jelena McWilliams
FDIC Chair Jelena McWilliams
Under McWilliams, the FDIC had a busy 2019 on the rulemaking front. The agency proposed changes to its brokered deposit framework as well how the FDIC sets deposit interest rates for non-brokered funds, among other things. McWilliams has also been focused on how the FDIC can keep up with technological innovation. She participated in a “tech sprint” event in Washington in August where she called for U.S. regulators to prioritize setting rules of the road for banks using artificial intelligence.

In 2020, the spotlight will stay on the FDIC as the agency considers applications for industrial loan companies that are unpopular among community banks, and participates in further discussions around reforming the Community Reinvestment Act.
Jerome Powell, Randal Quarles, Lael Brainard
Federal Reserve Board
The Federal Reserve’s heavy lifting to implement the 2018 regulatory relief legislation is largely done after the central bank finished rules that tailored prudential requirements for regional banks and joined other agencies to ease the Volcker Rule and living will requirements, among other things.

The Fed is expected next year to finalize a plan to consolidate many of the capital adequacy measures of its stress test program. Under a 2018 proposal, several current measures would be replaced by a “stress capital buffer.” Fed Vice Chairman of Supervision Randal Quarles has said the plan should be finalized in time for the 2020 round of stress tests. In a September speech, Quarles said the Fed has two options for improving the proposal: raising the minimum stress capital buffer or raise the Fed’s “countercyclical capital buffer” above zero in normal conditions.

But the Fed board will also likely play key roles in both the development of real-time payments systems, as the central bank moves ahead on building FedNow, and crafting a reform plan for the Community Reinvestment Act. The Fed notably sat out the release of a CRA reform proposal by the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. The board is said to have strong concerns about the proposed draft, and it is widely believed that Fed Chairman Jerome Powell is taking his cues on CRA reform from Gov. Lael Brainard, an Obama appointee.
FHFA Director Mark Calabria
FHFA Director Mark Calabria
The future of Fannie Mae and Freddie Mac largely lies in the hands of Federal Housing Finance Agency Director Mark Calabria, who has said his goal during his five-year term is to supervise the two companies’ exits from government conservatorship.

The agency is currently in the process of hiring a financial adviser, which will help to assess Fannie and Freddie’s plans to raise capital. Under new standards implemented in September, the two GSEs are now permitted to retain a combined $45 billion in earnings, which Calabria says will help protect the companies in the event of an economic downturn.

Still, Fannie and Freddie are predicted to need much high levels of capital in order to exit conservatorship, setting the stage for a new and improved capital framework Calabria expects to re-propose sometime in the first quarter. That framework is widely believed to be a prerequisite for the government-sponsored enterprises to leave conservatorship, and could determine the role Fannie and Freddie might play during periods of financial stress.
Sen. Mike Crapo, R-Idaho
Sen. Mike Crapo
The Idaho Republican who chairs the Senate Banking Committee remains a key figure in determining the fate of legislation sought by the industry, and 2020 could be his last year to put his stamp on the panel with speculation growing that he could chair a different committee in 2021.

In 2018, Crapo held the reins in negotiations over the regulatory relief bill that was signed into law. Similarly, legislation easing banks’ ability to serve legal marijuana businesses and relieving the burden of banks to seek “beneficial owner” information from customers must go through him before reaching the Senate floor.

In December, Crapo dashed the hopes of a pot banking bill getting enacted soon when he announced his opposition to the Secure and Fair Enforcement, or SAFE, Banking Act. That legislation already passed the House. He asked for public feedback on how to forge a legislative path that would address his concerns. Meanwhile, Crapo is said to be negotiating a bill with Sen. Sherrod Brown, D-Ohio, the committee’s top Democrat, to require companies to report their true owners to the government after the House already passed a beneficial ownership bill.

Crapo is also the central congressional figure in any potential legislative deal to reform the government-sponsored enterprises Fannie Mae and Freddie Mac.
Sen. Elizabeth Warren, D-Mass. and 2020 presidential candidate, speaks during the Iowa Democratic Party Liberty & Justice Dinner in Des Moines on Nov. 1, 2019.
Sen. Elizabeth Warren
The Massachusetts Democrat is a key progressive voice on the Senate Banking Committee, but her policy impact in 2020 will be obviously be more pronounced on the presidential campaign trail.

As Warren has risen to the top tier of the Democratic primary field, she has done so while proposing a plethora of reforms that would affect the financial industry. Those proposals range from creating a 21st century Glass-Steagall Act to imposing new curbs on private equity firms to making large banks foot the bill of her healthcare plan. As Democrat begin to hold their first nominating contests of 2020, her criticism of the financial services sector could only intensify.
House Financial Services Committee Chairwoman Maxine Waters
Rep. Maxine Waters
Following Democrats’ 2018 midterm victories, the California Democrat took the gavel of the Financial Services Committee and immediately shifted its focus to helping consumers, criticizing Trump administration-appointed regulators, holding oversight hearings with big-bank CEOs and trying to move the ball on affordable housing initiatives.

Waters will continue to control the Democratic caucus’ banking agenda in 2020. She has already stated she wants to hold an oversight hearing with members of the Wells Fargo’s board in the new year.

“While they are not involved in the day-to-day operations, they are involved in the direction and should know how things are operating,” Waters said of the bank's board. “So we are going to be bringing in at least a few of the board members.”
Rep. Patrick McHenry
Rep. Patrick McHenry
After the 2018 midterm elections gave Democrats control of the House, the North Carolina congressman took the torch for Republicans as the top GOP member of the House Financial Services Committee.

But McHenry has done more than just fill the ranking member’s seat, and will likely continue to have a strong voice in 2020. His relationship with Chairwoman Maxine Waters, D-Calif., is seen as more productive than that between former Chairman Jeb Hensarling, R-Texas, and Waters when the Democrats were in the minority. At the same time, McHenry has been a staunch defender of GOP causes and the Trump administration.

McHenry led the fight for Republicans opposed to Waters-backed legislation to enable banks to serve the cannabis industry, even as several GOP members defected to support the bill and the legislation passed the chamber with overwhelming support.

He also effectively delayed a committee vote on anti-money-laundering legislation requiring businesses to report their true owners at the point of incorporation. The panel eventually advanced the bill to the full House, but it didn’t receive as much GOP support on the House floor as its champions had hoped.

McHenry’s profile could rise further if Congress looks more closely at policies affecting financial technology and artificial intelligence, two areas that have been a focus for him. He has lauded Waters for establishing fintech and A.I. task forces, which he said puts a bipartisan legislative framework within reach.
Senator Mark Warner, a Democrat from Virginia, right, talks to Senator Jon Tester, a Democrat from Montana
Moderate Senate Democrats
With Senate rules requiring a 60-vote threshold to pass legislation, Senate Banking Committee Mike Crapo, R-Idaho, likely needs the support of a key bloc of moderate Democrats on the panel for several pieces of banking legislation to have a chance.

Moderate Democrats were key to getting support for Crapo’s 2018 regulatory relief package. On issues such as reforming Fannie Mae and Freddie Mac and overhauling anti-money-laundering rules, Crapo could potentially negotiate with centrists such as Sens. Mark Warner, D-Va., and Jon Tester, D-Va., rather than Sen. Sherrod Brown, D-Ohio, who is the committee’s top-ranking Democrat from the party’s progressive wing.

Two moderate Democrats who negotiated the reg relief bill — former Sens. Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana — lost their seats in the midterm elections. But two relative newcomers to the committee, Sen. Kyrsten Sinema, D-Ariz., and Doug Jones, D-Ala., fill out the moderate Democratic wing.