WASHINGTON — President Trump’s choice as the next head of the Federal Deposit Insurance Corp. is a consensus builder with extensive knowledge of recent banking policy debates, according to multiple industry observers and representatives.
James Clinger has spent his career outside the spotlight, serving multiple Republican chairmen of the House Financial Services Committee as a top aide. But he has played a key role on several issues, including helping to develop a GOP bill, which passed the House this month, to overhaul the Dodd-Frank Act.
Still, while Clinger is clearly experienced and knowledgeable, not many know what he believes outside of the agendas set by his bosses.
“There are very few people in this town who probably know what Jim Clinger’s policies are because he has been the commensurate staffer,” said Travis Norton, a policy adviser and counsel at the law firm Brownstein Hyatt Farber Schreck and former general counsel at the House Financial Services Committee. “He is like a career professional at an agency. He is there to help the chairman achieve his or her goals.”
J.W. Verret, an assistant law professor at the George Mason University law school who worked with Clinger on the banking panel, said he “is somebody who has been around banking law and policy for decades. There is nobody who knows it better.”
Clinger is almost certain to be confirmed, particularly given the Senate Democrats’ inability to mount a filibuster of any Trump administration nominees, but those on that side of the aisle fear Clinger will have views similar to those of his current boss, Chairman Jeb Hensarling, R-Tex.
“Given that it is a staffer for” Hensarling, who “has been one of the most vocal and aggressive critics of the FDIC and the orderly liquidation authority in particular, I think people have to be concerned whether or not the potential nominee has an ideological policy agenda rather than somebody who will be fair-minded and follow the law,” said Dennis Kelleher, president and CEO of the investor rights group Better Markets.
Hensarling has helped put other top aides, including former staff director Shannon McGahn, in important roles in the new administration. McGahn now serves as a counselor to Treasury Secretary Steven Mnuchin for legislative affairs. Some observers wonder just how many of Hensarling’s views have rubbed off on those who served him.
“The Hensarling diaspora is going to lead the charge to repeal or change many of the Dodd-Frank regulatory framework,” said Ed Mills, a policy analyst at FBR Capital Markets.
If Clinger chooses to, he can undermine or even undo aspects of Dodd-Frank, including work surrounding the agency’s Dodd-Frank powers to seize and unwind a large banking organization. The Treasury Department released an extensive paper last week outlining ways it wants to roll back banking regulation, including recommending the FDIC be removed from the “living will” process, which requires banks to provide guides on how to dismantle themselves in a crisis.
Clinger’s nomination helps solidify the Trump administration’s banking policy team. Trump has already nominated former OneWest banker Joseph Otting as the head of the Office of the Comptroller of the Currency. The president is expected soon to nominate former Treasury official Randal Quarles as vice chair of banking supervision at the Federal Reserve Board.
“We got the road map last week from Treasury as to what the priorities of the Trump administration are. We now have the drivers,” Mills said.
But some cautioned not to read too much into Clinger’s work as part of the Financial Services Committee, emphasizing he will be thoughtful and careful in his approach.
“I don’t subscribe to the view that Jim’s nomination to this position is tantamount to the president’s imprimatur on the Hensarling agenda,” Norton said.
Cam Fine, president of the Independent Community Bankers of America, said Clinger will follow his own path.
“He does have a free-market view of financial services regulation, which I believe is a good thing,” Fine said. “But I also believe that he will chart his own course as FDIC chairman and will do what he needs to do to protect" the Deposit Insurance Fund. "He is a low-profile, behind-the-scenes kind of policy official, reserved and quiet, but very effective. He knows his stuff.”
Those who have worked with Clinger, including Democrats, said he is a pragmatist and consensus builder.
Kevin Petrasic, who overlapped with Clinger as a Democratic staffer and then later worked with him as head of congressional affairs at the Office of Thrift Supervision, described Clinger as someone who is “willing to work on a bipartisan basis.”
Verret also noted that Clinger worked for a number of different chairmen besides Hensarling, including former chairman Rep. Jim Leach, R-Iowa, who ushered in the Gramm-Leach-Bliley Act that ended the separation of commercial and investment banking; Rep. Mike Oxley, R-Ohio, who helped craft the Sarbanes-Oxley law; and Rep. Spencer Bachus, R-Ala., who most recently took a position at the Export-Import Bank.
“Those are all very different guys with different perspectives,” Verret said. “Hensarling is probably the most libertarian; Chairman Bachus was very much a moderate Republican, and Jim thrived under all of them because they all understood Jim was the brains behind the banking committee.”
Petrasic also said Clinger’s role as a legal aide was different, because his job was to translate the chairman’s ideas and policies and implement them.
“Individuals who are there in policy positions, certainly we can surmise to a certain extent that obviously their policy views are probably influenced by their work for the chairman,” Petrasic said. “To the extent that you have folks that are in a different type of role like a legal role, I wouldn’t necessarily draw the same conclusion, because their job is a little different to implement.”