Evan Vucci/AP Photo
The status quo is a good way to describe Biden’s record on Wall Street to this point.
Quiet frustration over the Biden administration’s protracted staffing of the executive branch has begun to spill into the open. A Washington Post article over the weekend highlighted several vacancies in key positions. And as my colleague Alex Sammon reports, major elements of the White House executive order on competition policy will be stymied until President Biden nominates and the Senate confirms commissioners to the Federal Trade Commission and Federal Communications Commission, as well as an assistant attorney general for antitrust.
The situation with personnel on financial regulation is in even bigger trouble, and the progressive community is finally fed up. Earlier this month, 45 groups sent President Biden a letter outlining their frustrations. “Five months into the administration, many key positions, both at independent financial regulators and within Treasury, remain vacant,” the groups wrote on July 1. “These vacancies are serious impediments to action and perpetuate an unacceptable status quo.”
The letter has not previously been made public.
The status quo is a good way to describe Biden’s record on Wall Street to this point. Outside of the commendable hire of Gary Gensler at the Securities and Exchange Commission, very little has gotten done. It was news when Treasury Secretary Janet Yellen announced this weekend that regulators would assess the financial risks posed by climate change; but the bigger news is that the Financial Stability Oversight Council (FSOC), which would perform this assessment, has only held one meeting since Biden took office, and at that meeting, back in March, Yellen announced that climate change assessment as well, which apparently has not moved forward in over three months.
There’s been an implicit theory, based on the level of mainstream reporting, that Wall Street has faded into the background as a significant policy challenge, with Silicon Valley taking its place. That’s a deeply misguided view. From private equity roll-ups in practically every industry imaginable, to the looming prospect of financier-led privatization in infrastructure, to the machinations of hedge funds and other investors in meme stocks and SPACs, to the growing use of Bitcoin as a facilitator for fraud, financial institutions’ distortions in the market remain a vexing concern.
There’s been an implicit theory that Wall Street has faded into the background as a significant policy challenge, with Silicon Valley taking its place. That’s a deeply misguided view.
The public needs aggressive enforcers at every level to mitigate this threat, particularly given the previous four years of deregulation under the Trump administration. To give just one example, late last week Wells Fargo announced that it would close consumers’ personal lines of credit, and that as a consequence, credit scores could be damaged, because overall credit available for use would be reduced. Sen. Elizabeth Warren (D-MA) responded strongly to the potential for consumer credit scores to get dinged through no fault of their own, but in an environment where financial institutions don’t fear regulatory backlash, that’s the kind of outcome you get.
To change this, Biden would actually have to fill the remaining seats. And while he can’t control the relatively slow pace of Senate confirmations, he can start the ball rolling by putting forward the nominees. There’s an open seat on the Federal Reserve Board of Governors, with a second seat (held by Randal Quarles, the vice chair for financial supervision) set to open up in September. The vice chair of the Federal Deposit Insurance Corporation (FDIC) has not been selected. A vacant seat on the Commodity Futures Trading Commission (CFTC), which handles the multitrillion-dollar derivatives market, has not been filled. There’s only an acting chair at the CFTC as well, and that’s also true of the Office of the Comptroller of the Currency (OCC), the primary national bank regulator.
The lack of an OCC nominee is particularly puzzling, because it was such a hot topic dating as far back as the Biden transition. Two candidates were vying to run OCC—former Geithner Treasury official Michael Barr, and law professor and postal banking expert Mehrsa Baradaran—and now both appear to be out of the running. The Biden administration was briefly satisfied with a Trump holdover as acting comptroller, until he started actively lobbying for a rule that would have facilitated predatory lending. A replacement was selected for acting comptroller, one of a litany of temporary and staff replacements who have migrated from the Federal Reserve. But there’s still no named nominee, despite numerous bank regulatory challenges, in particular reversing the deregulatory excesses of the prior administration.
At the Treasury Department, Yellen has virtually no team in place on the financial regulatory side. There’s no nominee for assistant secretary for financial institutions, no nominee for assistant secretary for financial markets, and no deputy assistant for the Financial Stability Oversight Council. “The delay in filling these leaves you without the full capacity needed to make the economy work better for people and the planet,” said the signatory progressive groups.
One agency with a named nominee is the Consumer Financial Protection Bureau, but even that puts the Biden administration in a bind. Rohit Chopra, currently a commissioner on the Federal Trade Commission, is poised to lead CFPB, but Biden’s new executive orders on competition empowered the FTC to take a number of rulemaking actions. If or when Chopra leaves, that agency will have a 2-2 Democratic/Republican split. Biden has not nominated anyone to replace Chopra. He may satisfy the financial reformers by getting Chopra confirmed, but that would damage his agenda attacking corporate power until he appoints Chopra’s FTC successor. But Biden has already tapped the surprisingly excellent acting director of the CFPB, Dave Uejio, for a position in the Department of Housing and Urban Development, so he needs to get Chopra in so Uejio can move on.
Typically, a letter like this doesn’t go out unless its writers have exhausted all other private steps and believe that only making a scene can make a difference. It signals an exasperation with getting Biden’s administration to actually do something on Wall Street.
The 45 co-signer organizations include leading financial reformers like Americans for Financial Reform and the Consumer Federation of America, but also several climate policy groups like Evergreen Action, Friends of the Earth, and the Sierra Club. As climate risk becomes a major threat to financial stability, advocates are looking strongly to financial regulators to kick-start the green transition. Racial justice groups like Color of Change are also on the letter, which states that the slow pace of regulatory nominations is undermining Biden’s agenda of “economic and racial justice.”
The White House has not yet responded to a request for comment. There has also been no announcement to nominate anyone in these positions since the letter was sent on July 1.
