Who's who in the race-turned-marathon to lead OCC

August 16, 2021 10:00 AM

WASHINGTON — More than 200 days into the Joe Biden presidency, the White House has yet to make a public statement indicating who will lead the Office of the Comptroller of the Currency on a full-time basis.

Left-leaning reformers identified the appointment of an OCC as a critical opportunity for the Democratic administration to lay the groundwork for its priorities early on its term. Those priorities include the development of climate risk policy for banks and restarting the reform of the Community Reinvestment Act.

But after the original front-runner for the job, Michael Barr, came under heavy criticism from progressives, the process appeared to stall.

In the end, it took nearly five months for the administration to appoint an acting comptroller of the currency, former Federal Reserve official Michael Hsu. Hsu has proven to be more than just a placeholder, but he also has said he believes his job is to set up a future comptroller for success, and that his authorities are limited.

Even with an interim director in place, however, the White House’s silence has continued, going nearly eight months without a word on who it will appoint to the OCC’s five-year leadership term.

In the meantime, at least eight names have circulated among financial services industry observers as potential nominees, including Hsu himself. Their backgrounds range from Treasury Department veterans, to former regulators, to law professors.

What follows is a list of the candidates who were reported to be in the running, and in some cases out of the running.

Senate Committee on Banking, Housing and Urban Affairs

Saule Omarova

The latest candidate

to be mentioned

as a potential nominee for comptroller, Saule Omarova, has taught financial services law at Cornell University since 2014.

The New York Times reported recently that the administration was vetting Omarova for the job.

Before working in academia, she served in the George W. Bush-era Treasury Department as a special advisor in domestic finance, and she also worked as an associate in Davis Polk’s financial institutions group until 2006.

Omarova has expressed skepticism about fintech policy and crypto technology. In a

textbook chapter

published in April, for instance, she described the basic appeal of decentralized finance and cryptocurrency — a "trustless" system that does not rely on fallible intermediaries, such as banks or other brokers — as "a naïve view of the sources and dynamics of power in finance."

"While computer code does not possess humans’ subjective capacity for greed, it is written by humans prone to making mistakes — and, importantly, for humans driven by greed and other subjective motives," Omarova wrote.

She has also advocated for substantial reforms of the wider banking system. In another recent paper, she argued in favor of what she described as the “

People’s Ledger

,” in which banks’ customer deposits would be migrated en masse to the Federal Reserve’s balance sheet as a way to secure and “democratize” the financial system.

“Without the federal subsidy attached to demand deposits, banks’ riskier investments and activities — as well as those deemed less critical from the public policy perspective — will be directly subject to market discipline,” Omarova wrote. “Banks, in other words, will not be ‘special’ anymore. By separating their lending function from their monetary function, the proposed reform will effectively ‘end banking,’ as we know it.”

Michael Hsu

The Biden administration announced in May that Michael Hsu would serve as acting comptroller of the currency. Now three months into the job, he’s widely seen as a candidate for the full-time, Senate-confirmed role.

Hsu, a longtime Fed official who managed the agency's large- bank supervision, has already had a significant impact on the OCC since taking the reins of the agency — though he’s stressed that his authority as an acting director is less than that of a Senate-confirmed comptroller.

But his tenure so far has still been busy. Already, Hsu has restructured the agency’s leadership to give him direct oversight of the OCC’s bank supervision practice, directed the OCC to join the Network for Greening the Financial System — an international body of regulators attempting to identify the risks of climate change among financial institutions — and has officially committed to rescinding the Trump-era reform of the Community Reinvestment Act.

While Hsu has not commented publicly on his odds of eventually receiving an official nomination to the office he currently holds, some analysts have pointed to those policy moves and other actions as clear signs he will be in the comptroller’s chair for some time.

Raphael Bostic

As president and CEO of the Federal Reserve Bank of Atlanta, Raphael Bostic became a prominent voice among the country’s regulators for urging a more direct focus on equity and racial justice in the financial system following the police murder of George Floyd in Minnesota. He has called on the Fed to pursue “maximum employment” as one way to head off racial inequality.

Under the Obama administration, Bostic served as an assistant secretary in the Department of Housing and Urban Development. Before joining the Atlanta Fed, he taught courses on public policy at the University of Southern California. Like some other comptroller candidates, Bostic was also floated as a potential candidate for Treasury secretary before Janet Yellen ultimately secured the job.

Kara Stein

Another Obama-era appointee, Kara Stein served as a commissioner at the Securities and Exchange Commission until January 2019. She’s also a former Capitol Hill staffer who served under Sen. Jack Reed, D-R.I., on the Senate Banking Committee in the years following the 2008 financial crisis.

At the SEC, Stein was a frequent advocate for stronger consumer protections in the agency’s rulemaking. She was also reported to be a frontrunner for SEC chair, though the job would ultimately go to Gary Gensler.

Sarah Bloom Raskin

Sarah Bloom Raskin, formerly a Federal Reserve Board governor and a deputy secretary of the Treasury under Obama, was one of a handful of candidates to emerge later in the year for the country’s next OCC chief. Currently working as a visiting professor and senior fellow at Duke University, Raskin has reportedly been under consideration for a number of roles in the Biden administration, including Treasury secretary or even as a potential “climate czar.”

As the second-in-command at Treasury under the Obama administration, Raskin was tasked with running much of the department’s day-to-day affairs. On the Federal Reserve Board, she was noted for being outspoken about income inequality and arguing for robust financial oversight. Raskin's husband is Rep. Jamie Raskin, D-Md., senior whip of the House Democratic Caucus who led the second impeachment trial of former President Donald Trump.

Manuel Alvarez

An early contender for comptroller, Alvarez led the California Department of Financial Protection as commissioner for two years before stepping down this past June. Before leading one of the country’s most powerful state financial regulators, Alvarez spent six years in the fintech world, where he served as general counsel and chief compliance officer for Affirm, a nonbank fintech lender.

Given his blend of experience in government and the fintech sector, Alvarez was at one point seen as a strong candidate to lead the OCC. But shortly after departing state government this summer, Alvarez joined the crypto exchange Binance.US as chief administrative officer — a notable hire for a company then led by former acting Comptroller of the Currency Brian Brooks, a prior Trump appointee and champion of the fintech-crypto community. (Brooks has since left Binance.US, citing “strategic differences in direction” with colleagues.)

Mehrsa Baradaran

A little over two months after Michael Barr was first reported to be the front-runner for OCC chief, reports began to circulate in March that Mehrsa Baradaran was under serious consideration for the job, thanks in no small part to a surge of support from progressives such as Senate Banking Committee Chair Sherrod Brown, D-Ohio.

Baradaran, a professor of law at the University of California, Irvine, is best known in left-leaning policy circles as a leading advocate for the reintroduction of postal banking in the United States. She’s also written multiple best-selling books about the roles of racism and poverty in the financial system.

A relative outsider in Washington, Baradaran was criticized for a lack of experience in government and some feared the effects of her progressive policies on the industry.

Michael Barr

Michael Barr was the first name to emerge as a front-runner for a White House nomination to be comptroller of the currency in January 2021. But the former Obama Treasury official saw his star fade after a surprisingly potent progressive backlash.

Known in Washington as a key architect of Dodd-Frank, Barr serves today as a dean of public policy and teaches financial regulation at the University of Michigan. He’s also considered a longstanding authority on the Community Reinvestment Act, a contentious policy battleground at the OCC under the Trump administration.

But some progressives lambasted Barr for consulting with fintech companies in the years after he left the government, including LendingClub and Ripple Labs. Since the early spring, Barr has appeared to be out of the running for the role.