WASHINGTON Democrats are growing increasingly frustrated with delays to the confirmation process this year, particularly with the Senate Banking Committee, which has 11 pending nominees before it.
Most recently, President Obama named Kathryn Dominguez to fill the second of two open slots on the Federal Reserve Board, but few expect the Senate to vote on her or many others anytime soon.
Below we offer some frequently asked questions about the status of financial appointments this year and why growing tensions between Republicans and Democrats are making the process more difficult over time.
What's going on?
Lawmakers have ramped up their objections in recent weeks to the lack of judicial and administrative appointments that have been completed so far this year.
The Banking Committee announced its first confirmation hearing of the year for early September, when Congress returns from the summer recess. But the panel has a lot of nominees to clear through for the Fed, the Federal Deposit Insurance Corp., the Treasury Department and elsewhere.
The fact that it has taken this long has angered Democrats, who wrote to Banking Committee Chairman Richard Shelby, R-Ala., last week about the issue.
"The committee has not held a single nomination hearing; not one nomination has come before the committee in executive session; and no nominees have been discharged for the Senate's consideration," says the July 27 letter, signed by the panel's 10 Democrats. "It is our understanding that the Banking Committee is the only committee in the Senate that has yet this year to hold a hearing on nominees."
The lawmakers note that by way of comparison, in the seventh year of President George W. Bush's administration another situation of divided government, when Democrats had the majority in the Senate "the Banking Committee held three nomination hearings before the August recess and the Senate confirmed more than a dozen nominees who had been discharged or reported out of our committee."
The Banking Committee has since announced a Sept. 10 confirmation hearing for Adam Szubin, who is nominated to serve as undersecretary of terrorism and financial crimes at the Treasury Department. Analysts noted that nominees with national security duties often take priority. A Shelby spokeswoman declined to comment further on the committee's nominations schedule for the fall.
Meanwhile, Democrats are citing broader concerns with the process as well. Sen. Chuck Schumer of New York complained on the chamber floor last week that lawmakers have scheduled votes on just five federal judges this year, despite concerns about vacancies across the country a move he called "a disgrace."
White House spokesman Josh Earnest charged on Tuesday that the appointments process has "almost completely" broken down since Republicans took control of Congress this year. He pointed, for example, to the lengthy delay in getting Attorney General Loretta Lynch confirmed, noting that "it took almost as long as the four or five previous attorneys general nominees combined" for her to be confirmed.
"We have, on a number of occasions, expressed our frustration about the inability of the United States Senate to perform one of their most basic functions, which is to offer their advice and consent on administration nominees," he told reporters.
Critics of the Republicans' strategy warn that it could have lasting consequences for both parties should Democrats decide to retaliate if and when the tables are turned.
"The Republicans' decision to slow-walk every single nominee this year could come back to haunt them," quipped one Senate Democratic aide. "It also begs the question - have Senate Republicans decided that they can't win the White House next year?"
What positions are pending?
The two most visible nominees for bankers are those named as governors to the Fed board Dominguez, an economics professor at the University of Michigan, and Allan Landon, a community banker from Hawaii who was tapped in January. Szubin, in his role overseeing terrorism and financial crimes, also tops that list.
Below are the other nominees waiting for a hearing in the Banking Committee, which also has jurisdiction over housing and transportation matters:
- Adewale Adeyemo to be assistant secretary for international markets and development at the Treasury Department
- Amias Moore Gerety to be assistant secretary for financial institutions at the Treasury Department
- Jay Neal Lerner to be inspector general at the FDIC
- Therese McMillan to be federal transit administrator
- John E. Mendez and Leslie E. Bains to be directors at the Securities Investor Protection Corporation
- Patricia M. Loui-Schmicker to be a member of the board of directors of the Export-Import Bank
- Matthew Rhett Jeppson to be director of the Mint
Separately, there are several vacancies for which the White House has yet to offer nominees, including the vice chair of supervision at the Fed a position created by the Dodd-Frank Act and a replacement for Jeremiah Norton, who left the FDIC board earlier this year, though his term expired in 2013. Also, no one has been nominated to succeed the National Credit Union Administration's Debbie Matz, whose term as chairman has expired; she remains on the job.
Is there likely to be any movement this fall?
Beyond Szubin's confirmation hearing in early September, the outlook is hazy.
Shelby returned to head the Banking Committee in January with two years left before he hits the six-year limit on his panel chairmanship. Given that he has just about a year left before Washington devolves into an elections frenzy, his priorities are likely elsewhere. The Senate has a responsibility to offer advice and consent on executive appointments, but divided government does little to grease those wheels. While the pending nominations may be important, many of them may not be considered urgent, at least for the GOP.
"For Republicans, do you really want to spend time on nominations? There's low reward for them and it takes up time," said Mark Calabria, director of financial regulation studies at the Cato Institute and a former member of Shelby's staff.
After Landon's nomination to the Fed in January, Shelby said that he planned to wait for the White House to offer up a name for the second Fed opening before acting.
The Obama administration has moved forward by tapping Dominguez as the second Fed nominee albeit half a year later but it's now unclear that will be enough to sway the GOP chairman.
Shelby hinted in a recent C-SPAN interview that more delays could be on the way because of the White House's failure to nominate anyone to the vice chair of supervision position at the Fed. That position was created by the Dodd-Frank Act in 2010, but President Obama has never tapped anyone for it. Fed Gov. Daniel Tarullo is considered to be informally serving in that role.
"They want those nominees to fulfill the [Fed] board of governors. We want them to follow the law," Shelby said.
To be sure, critics on both sides of the aisle have balked at the longstanding vacancy, in part because the vice chair of supervision is required by statute to testify before Congress semiannually and provide updates about regulatory oversight. But raising the issue could prove particularly strategic for Shelby, who is a longtime critic of the Fed. It provides another opportunity to play up concerns with the agency's management and transparency.
"It's an easy way to highlight policy disagreements with the White House and the agency," said Brandon Barford, a partner at Beacon Policy Advisors. "There is a narrative that the Fed and the Obama administration are unaccountable they're so unaccountable that the administration won't even formally nominate someone in charge of financial regulation at the Fed. It's an interesting lens to use."
At the same time, analysts are left scratching their heads about why the White House did not name candidates to the Fed last year, when Democrats controlled the Senate and had changed the filibuster rules so that confirmation requires just 51 votes. Lawmakers and some industry officials had begun a push to confirm someone with community banking experience to the board, and there were reports that finding a suitable and willing candidate took longer than expected.
Why has this become such a hot-button issue?
Taking a step back from the current situation, there's evidence that the confirmation process has grown more divisive and more challenging for the nominees in recent administrations.
"Certainly there's a decades-long trend towards it being a less enjoyable process for everybody," said Calabria.
As seen with the Fed nominees, there is a growing sense that the confirmation process has become just another bargaining tool as part of the larger policy debate.
"I would liken it to guerilla warfare," said Barford. "Senators of both parties in many committees show their displeasure with administration policy by slow-walking or refusing to hold hearings."
The selection and recruiting process has also evolved. To be sure, it is often more difficult to bring on nominees for the final years of a presidency, where there are fewer big fights to win and projects to launch. But observers noted that the slow confirmation process and the harsher scrutiny nominees face could also turn off some who would otherwise be interested in serving.
Meanwhile, the fight over the so-called revolving door, where banking executives move between industry and government, has also changed the nature of the process. The recent clash over Antonio Weiss, a banker for Lazard and Treasury Department nominee, exemplified growing concerns by progressives that financial industry officials have too much of a hand in government. While Weiss withdrew his name as a nominee, he now serves as a counselor at Treasury.
Some in the industry argue that financial agencies benefit from having a variety of perspectives on hand and that limiting those with banking experience altogether could have adverse consequences. Discovering where and how that balance can be struck is probably a long way off.
"The markets themselves, financial institutions and the broader economy are best served when you have people from a variety of backgrounds in these key regulatory positions," said John Dearie, executive vice president at the Financial Services Forum, who added that there is "a confidence that people with market experience bring" during times of regulatory activity and market upheaval.