Five seats on federal regulators’ boards still need to be filled – but little action on nominees

The confirmation last week of Michelle (“Miki”) Bowman to a full, 14-year term on the Federal Reserve Board (beginning in February) left five more appointments to terms on federal financial regulators remaining to be either filled or confirmed by the Senate.

To date, there is little action apparent or pending for any of the appointments.

Two of the five regulators who remain in office are doing so in “holdover” status as they wait for the White House to nominate their successors, and for the Senate to confirm them. Until the latter event, they may continue occupying their seats.

The term of current Federal Deposit Insurance Corp. (FDIC) Member Martin J. Gruenberg officially ended in December. He is also a former chairman and vice chairman. Gruenberg has made it clear, in public remarks and press interviews, that he intends to remain on the board until a successor is confirmed by the Senate.

A former Senate aide himself (on the Democrats’ side), Gruenberg has served on the FDIC Board since 2005, when he was confirmed as vice chairman of the board. He then served as acting chairman from 2011-12, then was confirmed as chairman for a five-year term. His six-year term as a member of the board ended last year, but he remains on the board in holdover status (as allowed under the law).

The White House has been silent, to date, on a nominee to succeed Gruenberg.

Meanwhile, the third “appointive” seat on the FDIC Board, for board vice chairman, remains vacant (Gruenberg and FDIC Board Chairman Jelena McWilliams hold the other such seats, having been appointed by the president and confirmed by the Senate). The White House has been silent on a nomination. Thomas M. Hoenig was the most recent vice chairman; his term ended in April of last year (after a serving from November 2012), and he opted to leave the board.

Under the Federal Deposit Insurance Act (FDIA), not more than three of the five members of the FDIC board of directors may be members of the same political party. McWilliams, who has also served as a Republican Senate staffer, and Gruenberg even out the political distribution on the appointive side, at least for now. Meanwhile, the two statutory members of the board – Consumer Financial Protection Bureau (CFPB) Director Kathleen Kraninger and Comptroller of the Currency Joseph Otting – occupy at least one additional Republican slot on the board (Kraninger worked as a Republican Senate staffer also).

However, the political affiliation of Otting is unclear: he has never run for elected office and, until being named comptroller, had never held an appointed government position at either the federal or state level. Appointed by President Donald Trump, Otting is also a former business partner of Treasury Secretary Stephen Mnuchin (who is a Republican).

Depending on Otting’s political affiliation, the next vice chairman could end up being a Republican; in the past, the vice chairman was typically from the political party other than that of the chairman.

Additionally, the law requires that least one of the three appointive members “shall have State bank supervisory experience.” Neither Gruenberg nor McWilliams has that background.

Over at the National Credit Union Administration (NCUA), Board Member (and former Chairman) Mark McWatters is also serving in a “holdover” capacity, as his term on the board officially expired in August. The White House has been silent, so far, on a replacement for McWatters, who may also continue to serve until a successor is confirmed by the Senate. McWatters has not said publicly if intends to hold the seat until his successor is confirmed.

Like the FDIC Board, the NCUA Board may only have two members from the same political party. McWatters and Chairman Rodney Hood are Republicans; Board Member Todd Harper is a Democrat.

Of the five seats awaiting nominees, that leaves two seats open on the Federal Reserve Board of Governors – which may (or may not) have nominees for them.

In July, shortly before the Independence Day holiday, Trump tweeted that his “intended nominees” for the two open slots on the central bank’s board are bank executive Judy Shelton and economist Christopher Waller. However, the White House has not followed up with either an “intention to nominate” notification or a formal nomination to the Senate for either.

In fact, since then, the White House has been silent on either of the “intended nominees.”

Shelton is now the U.S. executive director for the European Bank for Reconstruction and Development (appointed to that position by Trump). Waller is now the executive vice president and director of research for the Federal Reserve Bank of St. Louis. The two would fill (if confirmed by the Senate) two seats on the board that have been open since Janet Yellen (a former chairman) and Stanley Fischer (a former vice chairman) left the board in 2018 and 2017, respectively.

Each Federal Reserve governor is appointed for a 14-year term, with terms staggered so that one term expires on Jan. 31 of each even-numbered year. After serving a full 14-year term, a board member may not be reappointed. According to the Fed, If a member leaves the board before his or her term expires, the person nominated and confirmed to serve the remainder of the term may later be appointed to a full 14-year term.