With election results, potential roster of new faces/titles in top positions, boards for regulatory agencies

While probably not at the top of the list of priorities for the apparent winner of the 2020 president election, his new administration will have decisions to make about who leads, or serves on the boards of, various federal financial institution regulators over the next several months.

President-Elect Joseph R. Biden (D) – who has apparently earned more than the minimum 270 electoral votes to take the presidency from Donald Trump (R) as the result of last week’s general election – has openings or replacements to fill or make at all five of the federal financial institution regulatory agencies. Those are: the three federal banking agencies, the Consumer Financial Protection Bureau (CFPB), and the National Credit Union Administration (NCUA).

Perhaps at the top of the list is nominating (and obtaining Senate confirmation of) a permanent Comptroller of the Currency for a five-year term. Brian P. Brooks is now the acting comptroller, having been tapped for that roll by Treasury Secretary Stephen Mnuchin after Joseph Otting resigned from the position last spring, having served only 29 months of his term. (Otting also served the least amount of time as comptroller in about 96 years.)

Brooks had filled the position of “first deputy comptroller” which put him in line to become comptroller (on the selection of the Treasury secretary) if the comptroller’s position became empty. Brooks also held the position of “chief operating officer” at the agency. He joined the OCC April 1, and became comptroller May 29.

Meanwhile, two seats remain open on the Federal Reserve Board. Trump has nominated Judy Shelton and Christopher Waller to fill the seats; both were recommended for confirmation by the Senate Banking Committee – but both nominations remain pending before the Senate.

Shelton has drawn controversy and some criticism for her past views about reinstituting the gold standard, questioning the effectiveness of federal deposit insurance, and the Fed’s independence from political influence. She was recommended for confirmation on a party-line vote of 13-12 by the committee.

Her past views have led to some erosion among senators on the Republican side in her support for confirmation. In September, a member of the Senate Republican leadership said Shelton “does not have the votes” to be confirmed to the seat, and that her nomination would not be brought to the floor until leadership was sure the votes were there to confirm her nomination.

It’s unclear what the impact of the status of Shelton’s nomination will have on Waller’s. However, the White House has said that the nominations of the pair must be treated in tandem by the Senate and cannot be considered individually.

If confirmed, Shelton would serve an unexpired term of 14 years from Feb. 1, 2010 (or until 2024). She would fill the seat vacated by former Chairman Janet L. Yellen, who resigned. Waller, if likewise confirmed, would serve the remainder of a 14-year term that began Feb. 1, 2016 (or until 2030). He would fill the seat vacated by former Board Member Sarah Bloom Raskin, who also resigned.

As of Monday, the Senate’s executive calendar did not include action on either Shelton’s or Waller’s nominations. Assuming the Senate does not act by adjournment of the current Congress in early January, Biden will have an opportunity to fill the seats.

Over at the FDIC, there are two seats to fill: that of vice chairman of the board (which is now vacant), and that of Board Member Martin Gruenberg, whose term officially expired nearly two years ago (in December 2018), but who has been serving in a holdover capacity until his successor is confirmed by the Senate. Trump has not nominated candidates for either seat.

At NCUA, J. Mark McWatters is serving in a holdover capacity (since his term ending in August 2019) until the nominee for his seat, Kyle Hauptman, is confirmed by the Senate. Both were nominated as Republicans. His nomination is currently pending before the Senate, after a split vote by the Senate Banking Committee to recommend confirmation. (Senate Democrats, on a voice vote, voted no.) But a vote on Hauptman’s nomination, like Shelton’s and Waller’s, has not yet been scheduled by the Senate. If the Senate fails to act when the current session ends, his nomination will come to an end.

That will leave Biden with that decision to make – and at least two others. First, the chairman of the NCUA Board is designated by the president (and is not confirmed by the Senate), and does not serve a set term. (That’s unlike the chairman of the FDIC, now Jelena McWilliams, who is Senate confirmed for a five-year term.) Current credit union regulator board Chairman Rodney Hood (appointed by Trump) could be displaced by Biden in favor of a Democrat, as early as January following inauguration.

The only Democrat on the board is Todd Harper, whose own term ends in April. Biden could name Harper board chairman, and then nominate another Democrat to take his place some time after April. Or, assuming Hauptman doesn’t get confirmed in time, Biden could have the opportunity to make two appointments – both Democrats (since the NCUA Board must be split between political parties).

Finally, the CFPB director’s job, now held by Kathleen Kraninger, will be up for change under a Biden administration – thanks to a Supreme Court decision pushed by the Trump administration that said the job is “at will” of the president, and not subject to “for cause” firing, despite the five-year term the director fills once confirmed. Democrats in both the House and Senate have been roundly critical of Kraninger’s performance as director, and will likely pressure the new administration to make a change.