One Year in, Under the Radar (Jan. 26)

Update 245 —  One Year in, Under the Radar:
Administration Reshaping Fin. Reg. Regime

A year into office, President Trump has made significant progress as his leading financial regulatory agency nominees are confirmed for office. To date, we have seen enough appointments of federal regulators with varying and generally ambitious deregulatory plans to describe the emerging financial regulatory landscape, and potential land mines.

Below, we survey how Trump appointees are changing the terrain at the major federal financial regulatory agencies.

Good weekends all,

Dana

—————————————————-
FSOC: Still Standing, with Stature

At Wednesday’s Senate Banking nomination hearing, senators questioned Thomas Workman, who would serve as FSOC’s independent member with insurance expertise. Workman was president and CEO of the Life Insurance Council of New York from 1999 to 2016.

Workman would join FSOC just as it reconsiders its listing of the large insurance companies critical enough within the financial system to trigger a crisis. Workman declined to answer direct questioning about what he thought about the $50 billion threshold at which FSOC declares a nonbank financial firm systemically important. He did echo the sentiment of a November Treasury report by expressing an openness to “tailoring” FSOC’s SIFI designation process by shifting regulatory analysis to focus on a firm’s activities, as opposed to its assets.

FSOC lifted its classification of AIG as a Systemically Important Financial Institution in September, while the DOJ dropped its case appealing a decision to delist MetLife. Prudential is the only remaining insurance company considered systemically important by the federal government. Expect Workman to sail through a relatively easy nomination process.
CFPB Staff get a Memo from Mulvaney 

Last November, the Trump administration appointed Office of Management and Budget director Mick Mulvaney as interim head to the Consumer Finance Protection Bureau. This appointment, which is the only position the administration will get to fill at this agency, drew an immediate legal challenge from outgoing Obama-era administrators.  Mulvaney remains legal acting head of the CFPB. Trump has yet to name a permanent nominee for a five-year term.

On Tuesday, Mulvaney released a memo to clarify his deregulatory stance and announce a review of “everything we do” at the CFPB. While he assured employees that he does not intend to shutdown the Bureau, he harshly criticized what he sees as his predecessors’ willingness to “push the envelope” by disproportionately target offending companies. Mulvaney might not be planning to end the CFPB, but he has certainly made clear his intentions to scale back the Bureau’s regulatory ambitions.

 

Goodfriend’s Single-Mandate Vision for Fed

Marvin Goodfriend for Fed Governor is one of the most polarizing nominations of the Trump administration yet. At Wednesday’s Senate Banking hearing, Ranking Member Brown was quick to take issue with Goodfriend’s belief that the Fed should only focus on half of its statutory mandate: stabilizing inflation.

Mr. Goodfriend has a long history of inflation hysterics. Sen. Warren called him out on his off-the-mark prediction in 2011 that further Fed interest rate cuts would push inflation past the Fed’s two percent target, without lessening the then-nine percent unemployment rate.

In 2012, he similarly stated that inflation would skyrocket if the unemployment rate fell below seven percent. Today, the unemployment rate is consistently south of 4.5 percent with inflation remaining stubbornly under the Fed’s two percent target. Goodfriend seems unmoved by this reality, and would likely push for more aggressive interest rate hikes should he be confirmed.

 

FDIC still a Guardian vs. Risk?

Jelena McWilliams (nominated to the FDIC Board) was a longtime Republican staffer on the Senate Banking Committee. She is currently the Executive Vice President and Chief Legal Officer of Cincinnati-based Fifth Third Bank. McWilliams would replace Martin Gruenberg, a critic of the Republican Wall Street bill, S.2155.  Her confirmation would give the FDIC three Republican Board members — its statutory maximum — along with Mick Mulvaney (CFPB Director) and Comptroller of the Currency Joseph Otting. The Trump administration has no intention to appoint Independent and Democratic members to the Board.

McWilliams emphasized her priority to reverse the consolidation and closure of community banks, which she argues should be exempt from the Dodd-Frank Act rule on proprietary trading. This would loosen their capital requirements and streamlining anti-money laundering reporting. While Williams earned unabashed praise from Republican members of the panel, Sen. Brown objected to her view that excessive leverage at the nation’s largest bank did not trigger the financial crisis. Her prospects for confirmation as FDIC Chairperson are strong, as Republicans are solidly supportive.

 

Familiar Faces at the CFTC

  • Chris Giancarlo — Giancarlo has been serving as CFTC chair since before Trump took office. As a Republican, Giancarlo has criticised FSOC (of which he is now a full-time member) of inadequately weighing the cost of regulation and SIFI designation on the institutions under its watch. This is in line with Trump’s deregulatory tendency and goes a long way towards explain the recent delisting of companies such as AIG.
  • Brian Quintenz — Quintenz was nominated by Barack Obama for this role, but the session ended before the Senate voted on his appointment. Trump briefly pulled the nomination before ultimately renominating the Republican investment manager and Hill staffer. Quintenz was confirmed Aug. 3.
  • Rostin Behnam — Benham is a former senior counselor to Debbie Stabenow and worked for the Attorney General of New Jersey. Benham joined Stabenow’s office in 2011, but has been a  supporter of DFA since its inception. Behnam assumed office last Sept. 6.

 

MIxed Signals at the SEC

Jay Clayton: Clayton was confirmed as SEC chair in May and he has exhibited conventional conservative ideology ever since. Notably, he has pushed to encourage IPO’s by reducing regulatory oversight of companies looking to go public. Sen. Cortez-Masto vocally opposed his nomination in committee. Nevertheless, with Clayton’s confirmation passing committee on a 15-8 vote, and the floor on a 61-37 vote, Clayton’s confirmation was never much in doubt.

Hester Peirce: Before nomination, Ms. Peirce was a senior fellow at the very conservative Mercatus Center at George Mason University. In that role, Peirce wrote numerous articles, op-eds, and books arguing that the regulatory response to the financial crisis was overblown and that allowing the market to “pare the big banks down” would’ve been more appropriate. When she was first nominated, she refused to commit to requiring public corporations to disclose political contributions. She was confirmed by the Senate last month.

Robert Jackson: Mr. Jackson has an illustrious educational background with degrees from Harvard Law and Kennedy schools, Wharton, University of Pennsylvania, and Oxford. Jackson is a staunch liberal regulator in line with Sen. Elizabeth Warren in his preference for oversight of large financial institutions. Mr. Jackson was confirmed along Ms. Pierce in December.

 

OCC — The Foreclosure King Goes to Washington

The Senate voted to confirm Joseph Otting as comptroller of the currency on November 16. The vote was 54-43, largely on party lines. Otting was the CEO of OneWest Bank, a lender co-founded by Treasury Secretary Steve Mnuchin. During the financial crisis he was labelled the “foreclosure king” for failing to effectively oversee thousands of loans to families who would eventually lose their homes. The nomination and subsequent confirmation sparked heavy criticisms from Senate Democrats.
Ex-Im Bank Avoids Garrett

Senate Banking rejected the Trump administration’s nomination of Scott Garrett to head the Export-Import Bank, with Republican Sens. Mike Rounds (S.D.) and Tim Scott (S.C.) crossing party lines to vote with Democrats, 13-10. Garrett’s nomination had been subject to intense criticism from business groups, primarily because of his strong opposition to the agency during his time representing New Jersey in the House. Other than the failed nomination of Garrett, there have been five other nominations to fill out: Claudia Slacik, Spencer Bachus III, Kimberly A. Reed, Judith Delzoppo Pryor, and Mark L. Greenblatt. These nominations are far from contentious with some of these nominees even drawing bipartisan support. If successful, these nominees would fill out the Ex-Im bank board for the first time in years.

28 thoughts on “One Year in, Under the Radar (Jan. 26)”

  1. Its like you read my mind! You appear to know a lot about this, like you wrote the e book in it or
    something. I believe that you can do with a few p.c.
    to force the message home a little bit, however other than that,
    that is wonderful blog. A fantastic read. I will definitely be back.
    asmr 0mniartist

  2. Hi to all, how is everything, I think every one is getting more from this
    web page, and your views are pleasant in support
    of new people. asmr 0mniartist

  3. Simply desire to say your article is as astounding. The clearness for your publish
    is simply cool and i can think you are knowledgeable on this subject.
    Well with your permission let me to grab your feed to stay updated with approaching post.
    Thank you a million and please carry on the enjoyable work.
    0mniartist asmr

  4. Does your site have a contact page? I’m having problems locating it but,
    I’d like to send you an e-mail. I’ve got some suggestions for your blog you might be interested in hearing.
    Either way, great blog and I look forward to seeing it improve over time.

  5. Good day! I just wish to give you a huge thumbs up for your excellent information you
    have got right here on this post. I will be returning to your website for more
    soon.

  6. It is perfect time to make some plans for the future and it’s
    time to be happy. I have read this post and if I could I
    want to suggest you few interesting things or advice.

    Maybe you could write next articles referring to this article.
    I desire to read more things about it!

  7. Today, I went to the beach with my children. I found a sea shell and gave it to my 4 year old
    daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and
    screamed. There was a hermit crab inside and it pinched her ear.
    She never wants to go back! LoL I know this is completely off topic but I had to
    tell someone!

  8. I believe this is one of the such a lot vital info for me.
    And i am happy studying your article. But should observation on few general issues, The web site taste is ideal, the articles is in point of fact excellent : D.
    Excellent activity, cheers

  9. Hey There. I found your blog using msn. This is an extremely well written article.
    I will be sure to bookmark it and come back to read more of your useful
    info. Thanks for the post. I will definitely return.

  10. Howdy! Do you know if they make any plugins to safeguard against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on.
    Any suggestions?

  11. scoliosis
    I know this site provides quality based posts and extra information, is there
    any other web page which provides such stuff in quality? scoliosis

  12. scoliosis
    An interesting discussion is definitely
    worth comment. I think that you ought to publish more about this subject matter, it may not be a taboo matter but usually people don’t discuss these issues.

    To the next! Many thanks!! scoliosis

  13. dating sites
    Hey I know this is off topic but I was wondering if you knew of any widgets I could add to
    my blog that automatically tweet my newest twitter updates.

    I’ve been looking for a plug-in like this for quite some
    time and was hoping maybe you would have some experience
    with something like this. Please let me know if you run into anything.

    I truly enjoy reading your blog and I look forward
    to your new updates. dating sites https://785days.tumblr.com/

  14. That is a good tip especially to those new to the blogosphere.
    Simple but very accurate info… Many thanks for sharing this one.
    A must read post!

  15. I’ve been surfing on-line more than three hours nowadays, but I never discovered any interesting article like
    yours. It is beautiful price sufficient for me. In my opinion, if all web owners and bloggers made just
    right content material as you probably did, the internet can be much more useful than ever before.

  16. That is really attention-grabbing, You are an excessively
    professional blogger. I’ve joined your feed and look ahead to seeking extra
    of your great post. Also, I’ve shared your website
    in my social networks

  17. Great work! That is the type of info that are meant to be shared around the internet.
    Disgrace on Google for not positioning this submit upper!
    Come on over and visit my website . Thanks =)

  18. I am not sure the place you’re getting your info, however good topic.
    I must spend some time learning much more or working out more.
    Thanks for excellent info I was searching for this information for my mission.

  19. Attractive component of content. I just stumbled upon your blog and in accession capital
    to say that I get in fact enjoyed account your
    blog posts. Any way I’ll be subscribing in your augment or
    even I success you access consistently fast.

  20. I have been surfing online more than 3 hours today, yet I never found any interesting article
    like yours. It is pretty worth enough for me.
    In my opinion, if all webmasters and bloggers made good
    content as you did, the internet will be a lot more useful than ever before.

  21. You made some really good points there. I checked on the internet for more info about
    the issue and found most individuals will go along with your views
    on this website.

Leave a Reply to http://bitly.com/3acu8mK

Your email address will not be published. Required fields are marked *