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President Obama's nomination of a Republican to the board of the Federal Deposit Insurance Corp. is fueling optimism that there may yet be a way for the Senate to confirm several pending financial nominees.
February 7 -
Bank lobbyists tend to dismiss the importance of the consumer agency as a voting issue in the presidential campaign. Here's why they shouldn't.
January 12 -
Although doing so carries legal risks for the Consumer Financial Protection Bureau, President Barack Obama's decision to recess appoint Richard Cordray to head the new agency was all about politics.
January 4
WASHINGTON — Despite Republican criticism over the recess appointment of Richard Cordray to run the Consumer Financial Protection Bureau, a key GOP senator Tuesday said the controversial hiring has not affected his position on other regulatory nominees.
"I wouldn't link it at all," Sen. Richard Shelby, the Banking Committee's ranking Republican, told reporters outside a hearing for five pending nominees. "But I've said all along I would look at each nominee on their merits, and I'll be looking at these nominees on their merits."
Yet the reverberations over Cordray are still being felt on Capitol Hill and at the banking agencies. Three relatively non-contentious FDIC board picks — Martin Gruenberg, nominated as FDIC chairman; Thomas Hoenig, nominated as vice chairman; and Thomas Curry, nominated as comptroller of the currency — have all been in limbo in the months since Cordray's January appointment. The White House installed the CFPB director without a Senate vote after Republicans vowed to oppose any choice for the new bureau absent changes to its structure.
On Tuesday, the committee questioned five additional nominees: former Treasury Department official Jeremiah Norton to assume an independent director's seat on the FDIC board; Jeremy Stein and Jerome Powell for two open seats on the Federal Reserve Board; former Morgan Stanley executive Richard Berner to run the new Office of Financial Research; and Christy Romero to become the special inspector general for the Troubled Asset Relief Program.
Although the fate of all nominees remains a hot topic, none of the questioning Tuesday was contentious, and the hearing adjourned in just over an hour. While that suggests the committee will move the five picks to the Senate floor, the key decision-maker appears to be Senate Minority Leader Mitch McConnell, who has butted heads with the White House over the appointments process.
During Tuesday's hearing, the FDIC and Fed nominees fielded questions about community banks and bank examination standards, and gave answers that have strong industry support.
Norton, who worked at Treasury under the last Bush administration and is now executive director of JP Morgan Securities, indicated support for a key item on the FDIC's agenda to review how regulation affects community banks. Echoing current officials of the agency, Norton noted that community banks provide a disproportionate share of small business loans.
"So it's critically important that regulation recognizes that import and that the FDIC, which is the primary federal regulator for a majority of those banks, takes that responsibility very seriously," Norton said.
Stein, a Harvard economics professor, also spoke in terms that would please community bankers. He said implementation of the Dodd-Frank Act should recognize that the law was meant primarily to reform regulation of larger institutions.
The Fed must implement the Dodd-Frank Act while minimizing undue regulatory burden "especially, I should note, for the smaller community banks, for whom the burden is hard to bear, for whom many of the issues in Dodd-Frank are not intended to be front and center," Stein said.
Asked by Democratic Sen. Robert Menendez about whether field examiners have cracked down too strongly in the wake of the financial crisis, Powell said that the message from the regulators' offices in Washington needs to be consistent with the message out in the field.
"We do need to recognize that especially community banks are important mechanisms for credit to the economy, and the business models of community banks are different than the business models of the big large banks, and we can regulate those appropriately and safely," said Powell, a visiting scholar at the Bipartisan Policy Center.
Norton was non-committal when he was asked for his view on whether the Transaction Account Guarantee program, a crisis-era program that raised the insurance limit on transaction accounts, should be extended. The question of whether to extend the program has exposed a fault line in the banking industry.
"I'd like to have a broader set of information if I were to be on the Board to make that assessment," Norton said in response to a question about TAG's extension, "but I think it's certainly worthy of serious consideration."
