Update 560 — Naming Names…Slowly
Status of Economic Policy Nominations
To date, the administration has nominated candidates for about a third of the executive branch appointments that require Senate confirmation. Around a third of those have been confirmed. This applies to economic, fiscal, financial policy positions, to departments like Treasury, and agencies like the SEC.
The nominations that have been made and confirmed are promising ones, but the pace of the process is bordering on pathetic. In this update, we examine the key economic and regulatory nominees waiting to be confirmed, important positions waiting for a nominee, and the downside of delay.
Of the nearly 1,200 Senate-confirmed positions in the federal government, President Biden has named 382, but only 141 have been confirmed. The administration and Senate need to move faster to ensure President Biden’s financial regulatory policy agenda can be enacted through the executive branch, where GOP obstruction is less feasible.
Among the consequences and risks attending delayed confirmations and extended vacancies:
- Biden is nearly a quarter of the way through his first term and potentially more than a third of the way through his Senate majority, limiting the amount of time for confirmations and ensuring administrative actions.
- Interim appointments and acting officials can only do so much for so long under the Federal Vacancies Reform Act of 1998. Confirmed nominees will go much further in enacting the President’s financial regulatory agenda.
- Agencies and bureaus could miss critical budget and program design cycles without fully confirmed leadership, hindering the ability to enact the President’s agenda.
Waiting To Be Confirmed
President Biden has recently named several progressives to critical financial regulation posts. The following nominees should be confirmed by the Senate as soon as possible:
- Comptroller of the Currency: Responsible for oversight of the national banking industry, the Comptroller of the Currency can overhaul banking regulations. Biden has tapped Professor Saule Omarova of Cornell Law School for the position. A critic of cryptocurrency and big banks, Omarova would be in a position to crack down on threats to financial stability such as poorly regulated financial technology, risky firm behavior, and bank mergers. Progressives have rallied behind Omarova while the banking industry has recoiled at the thought of facing true oversight. Republican opposition to Omarova will be strong, underscoring the industry’s concern about the strong potential to reform an agency mired by industry capture.
- Consumer Financial Protection Bureau: The CFPB is tasked with protecting consumers in the financial sector. The bureau’s first Assistant Director, Rohit Chopra, was nominated to take over the CFPB and vacate his current position as a Commissioner with the Federal Trade Commission. Chopra is an experienced nominee to run the agency with a keen eye toward the predatory nature of student loans. He will return the CFPB to the strong watchdog it was intended to be after four disappointing years under the previous administration. Chopra was named to this position several months ago, and his nomination is finally beginning to advance with a cloture motion from Senator Schumer filed Tuesday evening. A final vote should take place soon; any further delay in his confirmation is inexcusable.
- Commodity Futures Trading Commission: The CFTC regulates derivatives markets by preventing fraud, promoting transparency, and ensuring vibrancy. Biden recently named Acting CFTC Chair Rostin Behnam to serve as the permanent Chair. In addition, Biden nominated Emory University law professor Kristin Johnson and former Special Inspector General Christy Goldsmith Romero to fill the two other Democratic seats on the Commission. These nominations signal a focus on climate change and cryptocurrency as Benham has sponsored a report calling on US businesses to pay for their greenhouse gas emissions and is a critic of cryptocurrency.
- Treasury Assistant Secretaries: A trio of high-level Treasury posts are also in the process of being filled. Biden is looking to Ben Harris, a long-time economic policy advisor to Biden, to take on the position of Assistant Secretary of Economic Policy. While Harris does not have the background of a progressive, few can directly translate what Biden would like to see into real policy. Biden is tapping a long-time New York Fed official, Joshua Frost, to serve as the Assistant Secretary for Financial Markets. The role would have Frost overseeing the $22 trillion Treasury securities market, and his background overseeing two corporate credit facilities in the wake of COVID make him an invaluable pick. And lastly, Graham Steele has been nominated to serve as the Assistant Secretary for Financial Institutions. In the post, Steele, a former staffer of Sen. Sherrod Brown with impeccable progressive credentials, has the opportunity to increase oversight of cryptocurrency and hedge funds as well as incorporate climate change into financial stability analyses.
How Biden’s Confirmations Compare with Recent Presidents
Source: The Washington Post
Posts Waiting for Names
Although the Biden administration has made progress in naming individuals to key posts in recent months, some important nominations remain:
- Federal Reserve: Biden can make up to four new nominations for positions at the Fed, including Chair, Vice Chair, Vice Chair for Supervision, and an open governor seat. As we wrote last month, Biden has a unique opportunity to shape the Fed in a more progressive direction — particularly when it comes to financial regulation, on issues ranging from bank stress tests to climate risk.
The most important decision is whether to renominate Powell. But even if Biden keeps Powell on, he can select a progressive Vice Chair for Supervision, with potential candidates including Lael Brainard, acting Comptroller of the Currency Michael Hsu, and Atlanta Fed President Raphael Bostic. For the open seat, the administration is reportedly considering Michigan State professor Lisa Cook or AFL-CIO economist William Spriggs. Sarah Bloom Raskin, a former Fed governor and Deputy Treasury Secretary would make an exceptional nominee for any of these positions.
- Office of Financial Research: Created by the Dodd-Frank Act, the OFR is tasked with gathering data and conducting research about threats to financial stability, effectively an in-house think tank at Treasury. Under the Trump administration, OFR saw significant budget and staff cuts and has since provided little helpful research on emerging threats to financial stability such as climate change or cryptocurrencies. Biden can replace the current OFR director, a Trump appointee, to set the office back on track.
- DAS for FSOC: The Financial Stability Oversight Council is tasked with monitoring risks to the financial system and has the ability to subject firms to enhanced prudential regulation by the Fed by designating them as SIFIs. During the previous administration, FSOC was made ineffective by budget and staff cuts, the de-designation of the only SIFI firms, and the passage of new guidance in 2019, which severely weakened its ability to designate new firms.
The administration has yet to name a Deputy Assistant Secretary of the Treasury for FSOC, a position that can set the agenda for FSOC. Although only at the DAS level, this position can be quite influential, reporting directly to the Undersecretary for Domestic Finance and serving as a direct adviser to the Secretary in her role as FSOC chair. This position does not require Senate confirmation, and by appointing a progressive to this role, the administration could get the ball rolling on repealing the 2019 designation guidance.
What’s the Hold-Up?
Even though President Biden has put forward some giants in their field for key economic policy and financial regulation posts, the pace of confirmations and nominations has been too slow. Gary Gensler’s quick start and bold agenda as SEC chair underscore the importance of confirming nominees promptly. Many Senate Republicans have been placing holds on nominees to slow down the process in retaliation for certain actions by the Biden administration. This slow pace of nominations has frustrated groups and individuals supporting the President’s economic agenda. These are critical roles that need to be filled if Biden’s agenda is to be implemented properly. Although floor time is a limited commodity in the Senate, the Democratic majority must place a premium on confirming these individuals so President Biden can enact the financial policy agenda he campaigned on and deliver on voters’ expectations in this area.