WASHINGTON — Former Federal Deposit Insurance Corp. Chair Sheila Bair is calling on the White House to fill the two open seats on the agency’s all-Democrat board with Republicans or independents. Otherwise, she said, the longevity of the agency's policymaking could be undercut by the appearance of partisanship.
Bair, who led the FDIC from 2006 to 2011 and now serves as the chair of Fannie Mae, said on IntraFi’s Banking with Interest podcast Tuesday that she was troubled by the broader implications of a partisan struggle that culminated in the resignation of the Trump-appointed Chair Jelena McWilliams in early February.
“If public partisan battles are erupting at the FDIC, we've got a real problem, because that has not been the tradition of that agency, ever,” Bair said.
McWilliams was the lone Republican vote on the FDIC board when three Democratic members — now-acting FDIC Chair Martin Gruenberg, acting Comptroller of the Currency Michael Hsu and Consumer Financial Protection Bureau Director Rohit Chopra — attempted to publish a request for information on bank merger policy without McWilliams’s approval in December. The move touched off a struggle for control of the agency.
Bair, who was first appointed to lead the FDIC by then-President George W. Bush and kept on by the Obama administration amid the 2008 financial crisis, said that a shadow of partisanship would linger over the board unless it is filled out with some Republicans or independents.
The FDIC is "being controlled by three Democrats. They're good people, and they'll want to do the right thing,” Bair said. “The perception is, though, that whatever they decide is going to be part of a Democratic agenda, and that's going to undermine their rulemakings, whatever they do.”
“And then, when the next party comes in, it's going to be, ‘OK, we're gonna put our own people in,’ ” Bair continued. “And that's what we have to stop now.“
Bair said one way to prevent years of political tit for tat at the FDIC would be to balance out the agency’s five-member board with two new appointees who are not Democrats. Under federal law, the agency’s board of directors can have no more than three members of a single political party.
“President Biden may want to work with [Senate Minority Leader] Mitch McConnell to appoint two Republicans— or non-Democrats, independents, they just can't be Democrats — to the FDIC to make sure we have that balance, that richness of thought and diversity of opinion,” Bair said. “Because if they do that, there will be longevity with their decision-making.”
The Biden administration has made no indication to date that it will nominate new FDIC board members to be confirmed by the Senate in the near future. As it stands, the White House has struggled for months to secure Senate confirmation for several nominees at other financial regulators, including the Federal Reserve and Office of the Comptroller of the Currency.
But a refusal to fill out the FDIC board with non-Democrats could reverberate in financial policy for years — and not for the better, Bair said.
“When the Republicans get back in charge," Democrat-led financial policy is "going to be targeted, and I don't want to see that happen to the FDIC,” Bair said. “I don't want to see that happen at any regulator.”
