WASHINGTON — Acting Comptroller of the Currency Michael Hsu has a full policy plate a little more than three weeks since taking the job, but he stresses that the interim nature of his role means he will likely leave key decisions for his Senate-confirmed successor.
“If it can wait, it should wait," Hsu said.
In an interview with American Banker, Hsu discussed several issues he may have to confront before a permanent comptroller comes aboard. Those include a pending review by the Office of the Comptroller of the Currency of decisions made during the Trump era, regulatory policies for the post-pandemic recovery, and the OCC's framework for chartering fintech firms.
Yet he noted "a difference between an acting comptroller and a confirmed comptroller.” Somewhat in contrast to former acting Comptroller Brian Brooks, who advanced numerous initiatives that divided various stakeholder groups, Hsu said he views his job as setting up a future, Senate-confirmed comptroller for success.
“If there are pressing issues that have to be dealt with, they have to be dealt with. It would be a disservice to both the agency, the banking system, to the future comptroller, not to deal with those things,” Hsu said. “Beyond that, I think that those things are for a confirmed comptroller to weigh in on.”
Still, Hsu has not shied away from taking positions that shift the OCC's focus away from priorities laid out in the Trump era.
He testified last week that he was concerned that some fintech policy moves made by the OCC during the Trump administration had not been made in
“I think it’s really hard to do, because the holistic view — everything is changing rapidly, and there’s a lot of different agencies with a lot of different perspectives, but that shouldn’t stop us from trying,” Hsu said in the interview.
In other areas, Hsu is more circumspect. For example, he demurred on whether he believed cryptocurrencies have a place in the national banking system. “I'm not sure my belief matters,” Hsu said. “Let me start with that. Crypto exists. It's out there, there are people who are trading it, there are businesses that are basing their business models on how to interact with it.”
At the same time, Hsu praised the approach to cryptocurrency
The following conversation has been edited for length and clarity.
You’re coming to the OCC from the Federal Reserve. The Fed and the OCC are pretty distinct in terms of mission, culture, and structure. How do you expect your experience with the Federal Reserve to inform your approach?
MICHAEL HSU: When people think of the Fed, they think of monetary policy. The majority of folks on the [Federal Reserve] Board are PhD economists doing monetary policy. Then there's some payments folks, and then you've got supervisors. I think the culture of supervision at the Fed is closer to the OCC bank supervision culture than it is to the monetary policy culture at the Fed. You put us in a room together, and I think the examiners and supervisors would tend to cluster together and have war stories to tell each other and experiences to share more than with monetary policy economists, etc. That’s a kind of a long-winded way of saying, I don't think the differences are actually that big, culturally speaking, because bank supervision and examination, that is a particular culture that I would say is distinct, and the differences across the agencies are, in the scheme of things, not that big.
Do you believe cryptocurrency has a place in the national banking system?
I'm not sure my belief matters. Let me start with that. Crypto exists. It's out there, there are people who are trading it, there are businesses that are basing their business models on how to interact with it. Whether I believe in it or not, those things are happening. My primary job is to make sure that's done in a safe and sound manner in the national banking system. That’s my primary objective. It’s not to come to any normative judgements about crypto. I don’t think that’s relevant to me executing my duties and the agency executing its duties. Now, I do think what [Federal Reserve] Chair [Jerome] Powell has said about this — I have an affinity for how he’s approaching it. What’s the use case? Let’s think about the use case for households and businesses in the economy. It’s always good to anchor it to that; that seems like an intuitive and common sense way to approach.
One of the OCC’s consistent policy priorities for decades has been enhancing and preserving the power of the national bank charter. What do you think of that objective?
I think I can say two things safely. One is that I do believe in the dual banking system. I think that has been an important feature and benefit to the American economy and the banking system broadly. I think that’s an important thing to put out there. The second is that, right now, as I’ve said in my testimony and I’ll say to you, we’re reviewing these charters in this broader context. What I’m trying to do is ensure that the holistic view is consistent with the micro decisions on the charters. I think that’s important to do. I think it’s really hard to do, because the holistic view — everything is changing rapidly, and there’s a lot of different agencies with a lot of different perspectives, but that shouldn’t stop us from trying. So that’s what we’re trying to go through right now. That’s worthwhile and important so that we can explain that to both the institutions we’re dealing with, to our staff, and our stakeholders.
You said in recent congressional testimony that the OCC had "learned important lessons based on the partial implementation of the 2020 rule" to reform the Community Reinvestment Act. What were those lessons?
So, [the rule is] under review. I don’t want to get in front of that review. The reason I’m hesitating is because I asked staff to undertake this review and put all options on the table. I don’t want to unduly influence that through comments I’m saying publicly about it. I think it’s safe to say the 2020 rule — parts of it are complicated, and part of that implementation is just dealing with very hard practical realities around that. I’ll just leave it at that. I think sometimes, that’s fine. That’s what we need to do. It informs our experience with the rule and the efficacy of the rule. Once we get through this review, I’ll be able to answer that question more fulsomely.
A number of analysts over the years have said the OCC has a tendency to be a “cheerleader” for the national bank industry. What do you make of that charge?
I don’t believe that charge is founded. I think what can happen sometimes is, an examiner will have what I would just call a fairly narrow perspective, either on an institution or a matter. And that can be interpreted as capture. But we’re keenly aware of that. Here at the OCC, I know for sure that there are some mitigants to that. For instance, for the examiners in charge, they have term limits. It's a little bit like the State Department; you can't be the head of the Citi team in perpetuity. After five years, go work on another team. That really ensures fresh perspective on the firm, and that that person gets a fresh perspective across other firms.
I’ve heard you say that you have no plans of revisiting the OCC’s unpublished “fair access” rule. Can you elaborate?
It’s just not a priority.
Why not?
It just doesn’t fit with the priorities. I’ve laid out a set of priorities based on some problems to solve. Part of my responsibility is to solve some urgent problems. Those are what they are, and not everything can be a priority. That’s just what we’re focused on.
Do you have any policy priorities that would benefit from or require congressional action?
In all states of the world, I’ll answer yes. Can Congress assist in some of the things we do — I think the answer is always going to be yes, Congress can assist. Now, how can they assist? Are those things realistic? I think those are totally different questions. And — well, I’m acting comptroller of the currency. I can control things that are in my world. I can’t, and don’t wish to, tell Congress what to do or how to do it. I’m a taker. If they have questions, absolutely — we’ll respond to those, we’ll help provide technical assistance. If they ask for my views, I’ll provide my views. I think that’s the right relationship. They set the laws, we implement them. I have reached out to members of Congress to build relationships, to open that dialogue. So far, the response has been pretty good.
I asked former acting Comptroller Brian Brooks whether there was anything an acting comptroller shouldn’t or couldn't do, which a Senate-confirmed comptroller could do. His response, more or less, was no. Where do you stand on the limits of your authority?
I don't share Brian's view on that. I do think that there is a difference between an acting comptroller and a confirmed comptroller. The main thing is, for the acting comptroller, if there are pressing issues that have to be dealt with, they have to be dealt with. It would be a disservice to both the agency, the banking system, to the future comptroller, not to deal with those things. That’s how I’ve laid out those priorities, is through that lens. Beyond that, I think that those things are for a confirmed comptroller to weigh in on. If it can wait, it should wait. But waiting is a decision, so I want to make sure that those things are dealt with expeditiously and in a way that sets up the future comptroller for success.
