WASHINGTON — There’s a well-worn path for an acting head of a regulatory agency — keep your head down and try not to ruffle many feathers.

But Keith Noreika, the acting head of the Office of the Comptroller of the Currency, doesn’t appear interested in taking that road.

In his first appearance before the Senate Banking Committee, he took digs at two fellow federal agencies. He suggested the Consumer Financial Protection Bureau plays second fiddle to the OCC in identifying and correcting consumer problems at big banks. And he said a second approval by the Federal Deposit Insurance Corp. shouldn’t be necessary if a bank has already been chartered by the OCC.

“It looks to me like he's clearly going to be more than in a caretaker position,” said Daniel Stipano, former deputy chief counsel at the OCC and now a partner at Buckley Sandler. “He's talking about making changes and streamlining regulations and reducing burden, so these are all important policy initiatives.”

Keith Noreika, acting Comptroller of the Currency
“It looks to me like he's clearly going to be more than in a caretaker position,” one former OCC official said of Keith Noreika, the acting head of the agency. Bloomberg News

Noreika called for other sweeping policy changes, including a regulatory “traffic light” that would give a lead regulatory the go-ahead to address a concern at the bank while other regulators with backup authority were prevented from proceeding with a regulatory action.

The new OCC chief’s views alarmed some lawmakers.

“You come to the OCC … on an interim basis from a prominent law firm where you represented big banks. ... And here we get a recommendation from you to roll back the regulations for CFPB. That concerns me,” said Sen. Chris Van Hollen, D-Md., during the hearing.

But serving as an acting agency head — a successor, Joseph Otting, has already been nominated — may make Noreika less beholden to the constraints that a permanent comptroller might face.

“One could argue that being an acting head might make him more reluctant to be explicit about his views, but you could also make the case that he is less shackled and can say what he wants because he's essentially a short-timer,” said Ian Katz, a policy analyst at Capital Alpha Partners.

Some also said it appears that Noreika has been deputized by the Treasury Department to implement many of the recommendations laid out in a regulatory relief report released last week.

“What he's proposing to do seems to be consistent with the Treasury’s views on reducing regulatory burden," said Stipano. "He clearly is in sync with them in that regard.”

If Noreika is taking direction from Treasury, that would be irregular at the very least. By statute, the Treasury secretary has only limited oversight of the OCC.

An spokesperson for the OCC said that Noreika’s views are “the independent views of the Office of the Comptroller of the Currency” and that his testimony was written after meeting with a wide range of stakeholders, including other regulators.

A White House official also pushed back on the notion that agency nominees will be de facto lieutenants tasked with following through on the recommendations made in the report. However, they also said the nominees are likely to look upon the recommendations favorably.

"They are independent agencies after all, but I certainly think most of the recommendations that you see in the Treasury report are recommendations that most of our nominees … will have no problem viewing as reasonable and warrant consideration,” an official told reporters on a call Thursday.

Still, some wonder if the Trump administration — which is not bound by convention in many other ways — will continue to break with traditions here. It is rare for one regulator to publicly criticize another, for example, as Noreika did with the CFPB.

“We don’t see much activity of the CFPB regulating” banks with assets of $10 billion to $50 billion, Noreika said. “So they’ve actually, in many ways, gotten less regulation since Dodd-Frank has passed.”

Observers said the change was noticeable.

“He definitely took a feisty, assertive deregulatory stance,” Katz said. “It stood out, but I don't think it should have been a big surprise. He was chosen by the Trump administration, so he comes in with a different approach and a different mandate.”

Bart Naylor, a financial policy advocate at the watchdog group Public Citizen, said “the Trump bank team is not letting decorum stand in the way of deconstructing prudential guardrails.”

But other observers saw Noreika’s testimony as an example of someone who is knowledgeable and being constructive rather than just warming a seat until the Senate acts on a nominee. Noreika is expected to be able to stay only 130 days in his post.

“I think that Noreika is taking the initiative and moving forward in a real way,” said Oliver Ireland, a partner at the law firm Morrison & Foerster.

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