Bankers' hopes that President Obama's second term would be easier on the private sector were quickly dispelled by two recent announcements unveiling his chosen "cops on the beat."

Attorney Mary Jo White was nominated as head of the Securities and Exchange Commission and Richard Cordray was renominated as director of the Consumer Financial Protection Bureau.

White enters the scene with a well-recognized reputation for getting bad people sent to prison, and for defending key people in financial institutions against litigation brought by the same agencies for which she has served. While some see her work at banks as a liability, it should be viewed as a strength. Her appointment would result in an SEC chair who has knowledge of both sides in a contentious environment where each contingency is supported by significant political and economic resources.

Cordray, on the other hand, was a recess appointment and bitterly opposed by Republicans who have objected to the CFPB as a standalone agency without congressional oversight. Many financial services providers have voiced strong opposition to the CFPB in general, believing it harbors anti-bank sentiments. Prior to a recent appeals court decision, which ruled recess appointments unconstitutional and put the status of Cordray's appointment in jeopardy, there was evidence his renomination under any circumstances would be contentious. In fact, his current status is in legal jeopardy.

Both announcements, coupled with the nomination of Jack Lew – Obama's chief of staff who has minimal experience in the banking industry – for Treasury secretary, signal the White House is working towards establishing a team likely to be tough on the private sector. This is noteworthy as the political climate of the next two years will determine the framework of legislation impacting the banking industry and will set the stage for the SEC and CFPB in years to come.

Together, White and Cordray will be responsible for getting the president's message across the broad spectrum of financial institutions. Their to-do list involves the implementation of 139 new rules from the Dodd-Frank Act, including the unfinished work on the so-called Volcker Rule, the proprietary trading ban which many view as a convenient way to break up the six biggest financial institutions.

White will also have to finish what her predecessor former SEC chairman Mary Schapiro started. While Schapiro made great strides in changing the SEC's analysis and enforcement units, there are many critics who feel she did not do nearly enough to fix an organization that had years of warning about Bernie Madoff.  If the number and amounts of fines the SEC has collected in recent years are a measurement, then one would have to judge the organization's changes as at least moderate successes. However, the emphasis on fines in lieu of jail sentences is seen as bad policy for everyone involved, including shareholders and taxpayers.

Many bankers today complain of a more adversarial attitude on the part of examiners. Which policy direction will White and Cordray take? What new policies would Lew at Treasury support regarding examination procedures by the Federal Reserve? Probably one largely influenced by the White House. And the president has made several very significant remarks that question the present structures and sizes of financial institutions. "Never again will the American taxpayer be held hostage by a bank that is too big to fail," he said in January 2010.

The Obama administration has indicated its positions taken in the Inaugural Address will rely on and be influenced by public support on key issues. Such public support for the banking sector is not strong in either the U.S or Europe. A recent survey presented at the World Economic Forum indicates that trust in bankers has dropped to 50% of those polled in all the major countries of the West, including current opinion levels in the U.S.

White and the other new appointees now find themselves in the middle of a political battle on a wide variety of critical issues. These decisions will have a major impact not only on banking, but the nation's economy as well. 

John Alan James is executive director of the Center for Global Governance, Reporting and Regulation at Pace University in New York. He is also program director of Pace University's Certified Compliance and Regulatory Professional certificate program.