WASHINGTON — As the process to nominate and confirm a comptroller of the currency drags on, many observers speculate that the Biden administration may stick with the official now in the job: acting Comptroller Michael Hsu.
Appointed in May, Hsu has led the Office of the Comptroller of the Currency for a majority of President Biden's term. Meanwhile, multiple candidates to lead the agency longer-term have come and gone. Most recently, Saule Omarova withdrew from contention after it was evident she did not have enough Senate support.
Experts say the next logical step for the administration could be to nominate Hsu.
“To an outsider like myself, [Omarova’s withdrawal] does make him the most obvious candidate for that job,” Ian Katz, managing director of Alpha Capital Partners, said of Hsu.
A former Federal Reserve official, Hsu has been praised by progressives for policies including climate risk standards. But his Fed experience combined with a relatively low-key style could persuade centrist Democrats, who have seen prior OCC candidates as too extreme, that Hsu would bring a balanced approach.
"To the extent that centrist Democrats are looking for someone who the banking industry in their districts can work with, I think Michael Hsu fits that bill," said Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress.
The leadership of the OCC has been something of a moving target for quite some time, with former President Donald Trump and now Biden appointing an extended line of mostly interim comptrollers, many of whom have brought starkly different philosophies to regulating the national bank system.
“In the past five years, there have been six comptrollers or acting comptrollers, and they have all been so different from each other, the agency staff must have whiplash,” said Dan Stipano, a partner at Davis Polk and a former OCC attorney.
For the White House, the challenge has been finding an OCC nominee liberal enough to satisfy of Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and Sen. Elizabeth Warren, D-Mass., while not alienating bankers and centrist Democrats whose support is crucial.
Omarova, a Cornell University law professor, had the support of progressives but her views alarmed bankers and
Hsu has brought some relative stability. And to progressives who were eager for a Biden-appointed OCC leader to be more aggressive on issues like climate change and diversity in the banking industry, Hsu has been more than just a caretaker appointee.
“I think Michael Hsu has been a good acting comptroller. He has said a lot of the things that I and other progressives want to hear,” said Phillips. “At this point, we just need him to follow through, and as long as he does that, I’ll be very happy.”
Hsu has urged
Although Hsu’s seven-month tenure gives him experience that helps burnish his credentials, the decisions he makes as acting comptroller for as long as interim appointment lasts also carry risks. Any policy with his name on it welcomes political scrutiny from the Senate.
“He’s in a very tough spot, because he’d like to be comptroller and could continue to be the comptroller throughout the entire Biden administration,” said a lawyer who works closely with the banking industry. “But if he’s going to be there for a while, he’s going to have to make decisions, and then he’s going to have to make decisions he can defend on Capitol Hill.”
While Hsu has managed to keep a relatively low profile, his
The vote, which has
“Hsu could have just said that he’d prefer to wait and read the FDIC’s request for information, and instead, it looked like he was initially hiding his notational vote, which didn’t look very brave,” said the industry lawyer. “It’s a bad look.”
The political stakes for any acting official interested in full-time confirmation would be difficult under typical political conditions. “It’s always hard being an acting comptroller under any circumstances, even one who’s appointed by the administration,” said Stipano.
Other analysts say that the policy outlook for national banks under the Biden administration remains roughly the same whether Hsu or someone else gets the OCC nod.
“For the people who could be nominated by the White House, the range of differences in what they would do on the job is probably pretty small,” Katz said. “It really comes down to a couple of very specific things, like their views on fintech charters, a certain element of the Community Reinvestment Act, or a certain tone.”
“Pretty much anybody who's going to be nominated by this White House is going to be pretty liberal and not someone that the banks would probably love,” Katz added. “It's all relative.”
