State of Noms for OMB, SEC, CFPB

Update 510 — In Tanden’s Wake:
State of Noms for OMB, SEC, CFPB

Late last night, President Biden withdrew the nomination of Neera Tanden to head the Office of Management and Budget (OMB), leaving an opening at an agency that will play a crucial role in defining the Biden economic agenda. Reports suggest that Shalanda Young, Biden’s nominee for Deputy Director at OMB, may be bumped up to lead it.

Yesterday, Young testified before Senate Budget, and Biden’s nominees to lead the SEC and the CFPB — Gary Gensler and Rohit Chopra — testified in a dual confirmation hearing before Senate Banking. Gensler and Chopra are experienced, reform-minded policymakers who have been confirmed by the Senate before by wide margins. All three nominees are expected to have a speedy confirmation process.

Below, we examine their histories and stances, as well as the challenges they will face in their respective roles if confirmed. 

Best,

Dana

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Gary Gensler, Chair of the SEC 

President Biden nominated Gary Gensler to be the next chairman of the Securities and Exchange Commission (SEC). Gensler is currently a professor at MIT, with courses on blockchain technology, digital currencies, financial technology, and public policy. He is a former Goldman Sachs partner and Clinton-era Treasury official, as well as the former Chairman of the Commodity Futures Trading Commission (CFTC) under President Obama.

When Gensler first re-entered the government to lead the CFTC in the midst of the 2008-09 financial crisis, some on the left were suspicious of him due to his close ties to Wall Street and a record of opposing regulation of financial derivatives at Treasury. But, as Chair of the CFTC, Gensler was a driving force behind the implementation of various key Dodd-Frank derivatives market reforms, reigning in risk and abuse in the derivatives market. Gensler has since established himself as a tireless advocate for financial stability. 

The SEC is the primary securities regulator at the federal level. If confirmed to take over at the SEC, Gensler will have a broad regulatory portfolio. In his Senate Banking confirmation hearing yesterday, Gensler stressed the need to strengthen transparency and accountability in markets. He pointed to the popularity of human capital, environmental, and political disclosures among investors as reason to expand disclosures. Gensler was also asked about the recent GameStop trading frenzy. In response to these questions, he noted arising challenges related to investor protection posed by popular online trading apps and committed to examining the “gamification” of stock trading. 

In 2009, Gensler was confirmed to CFTC Chair with overwhelming support, receiving only 5 nay votes. With his strong expertise and potential bipartisan appeal, the well-credentialled Gensler appears to be on track to win confirmation in the coming weeks. 

Rohit Chopra, Director of the CFPB 

Biden nominated Rohit Chopra to be the next director of the Consumer Financial Protection Bureau (CFPB). A known consumer advocate, Chopra would be returning to the bureau if confirmed. Back in 2011, he helped establish the CFPB, serving as its first student-loan ombudsman. Chopra currently serves as a Commissioner at the Federal Trade Commission (FTC), where he has campaigned for tougher consumer privacy and enforcement penalties.

As Director, Chopra would oversee consumer financial products and services. Under his leadership, the CFPB will fulfill its intended purpose as a robust regulator. Chopra, testifying alongside Gensler before Senate Banking yesterday, said he would seek to protect consumers struggling with debt amid the pandemic from potential abuses by lenders, particularly in the housing market. During the hearing, he mentioned his intention to focus on inaccuracies in credit reporting and issues related to debt collection. Notably, freshman Senator Jon Ossoff raised questions about Too Big To Fail at the hearing, indicating an interest in financial systemic issues facing the Committee.

Other likely priorities include restoring the agency’s focus on enforcing fair lending laws, reversing the Trump administration’s rollback of payday protections, and determining what counts as an “abusive act or practice” under Dodd-Frank. 

Like Gensler, Chopra previously secured a Senate confirmation and possesses strong credentials, but his confirmation may be dragged out over the coming months. In the past, Republicans have accused the CFPB of regulatory overreach and may try to delay installing a proven regulator like Chopra as Director.

Shalanda Young, Deputy Director of the OMB 

Shalanda Young, Biden’s nominee for Deputy Director Office of Management and Budget, appears to be heading towards a speedy confirmation. A 12-year veteran staffer of the House Appropriations Committee, Young earned praise from the left and right. During her confirmation hearing yesterday, Senate Republicans eagerly praised Young for her years of Congressional service. Ranking Member Lindsey Graham joked to Young that, “you might talk me out of voting for you, but I doubt it.” Progressives also have only good things to say about Young, winning high praise from Appropriations chairs DeLauro and Leahy. 

Young’s broad popularity stands in stark contrast to Neera Tanden, who withdrew her nomination yesterday for OMB director after facing insurmountable opposition from Joe Manchin and Senate Republicans. This has led to open speculation on both sides of the aisle about promoting Young to OMB’s top job. Republicans repeatedly asked Young how she would feel about such a promotion, to which Young tactfully reiterated her support for Tandan. Prominent Congressional Black Caucus members have privately lobbied the Biden team to tap Young. Today, House Leadership also backed Young for the position. 

One more pressing matter for whoever ends up heading OMB: budget sequestration. This fiscal year’s appropriations will be the first in a decade not subject to across-the-board spending cuts, per the 2011 Budget Control Act. Democrats this Congress have more latitude to pursue ambitious social programs without the pain of arbitrary, job-costing budget cuts, and will do so in partnership with Biden’s OMB director.

Whether as Deputy or Director, Young is poised to play a crucial role in shaping President Biden’s budget proposals as well as the administration’s regulatory and fiscal agendas. She has promised to center equity for historically disadvantaged communities and modernize government agencies’ woefully out-of-date IT software in her role at the OMB. 

What Comes Next for the Noms

Ensuring all three nominations are speedily confirmed is a priority for the Biden Administration. After Gensler and Chopra answer any remaining questions of Senate Banking members, the committee will then vote as soon as next week on whether to send the nomination to the full Senate for confirmation. Before Young’s nomination can be sent to the full Senate for consideration, Young will appear before the Senate Homeland Security and Governmental Affairs Committee tomorrow for a second nomination hearing.