Chopra nomination to CFPB likely first step in number of leadership changes ahead

NCUA's Hood signals his tenure as chairman coming to an end

By tapping Rohit Chopra as the intended nominee for next director of the federal consumer financial protection agency, the incoming Biden administration is signaling that changes are coming to leadership of federal financial institution regulation.

Monday, President-elect Joe Biden announced he intends to nominate Chopra as Consumer Financial Protection Bureau (CFPB) director. Since 2018, Chopra has been a member of the Federal Trade Commission (FTC). He served as assistant bureau director during the Obama administration and was student loan ombudsperson while at the agency – a post mandated by the law that established the agency itself (the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act [Dodd-Frank]). Chopra also played a role in “standing up” the agency in 2011.

2021 regulator change info graphicIf nominated and ultimately confirmed, Chopra would be the fourth CFPB director and would replace Kathleen Kraninger, who came into the office following a chaotic process that saw, at one point, two directors in place at the same time. Following the resignation of the first CFPB director – Richard Cordray – in 2017, Deputy Director Leandra English ostensibly took over under provisions of the Dodd-Frank law, which stated that the deputy takes over in the event of the director’s office being vacant.

However, President Donald Trump had different plans, and named Office of Management and Budget (OMB) Director John (“Mick”) Mulvaney acting director, citing the Federal Vacancies Reform Act (FVRA), which gives the president the power to appoint replacements for federal leadership vacancies.

Trump, and Mulvaney, ultimately prevailed. Mulvaney held the job (as “acting director”) until December 2018, when Kraninger was sworn in after being confirmed by the Senate (on a vote of 50-49) for a five-year term ending in 2023. A former congressional staffer, Kraninger had also served as associate director for general government for the Office of Management and Budget (OMB), which Mulvaney also oversaw as director.

Meanwhile, a lawsuit claiming the bureau itself was unconstitutional – because it said, among other reasons, the director could only be removed “for cause” (that is “inefficiency, neglect of duty, or malfeasance in office”) rather than “at will” by the president – was working its way toward the Supreme Court. In June of last year, the court ruled that the agency itself was constitutional, but the “for cause” provision in the law was not.

That ruling essentially opened the door for Biden to replace Kraninger – which the Chopra nomination report indicates that’s what he intends to do.

Other changes are likely coming soon, too. It is widely expected that Biden will make a change in the chairmanship at the National Credit Union Administration (NCUA), replacing current chairman and Republican appointee Rodney Hood with current board member and Democrat appointee Todd Harper. (The NCUA chairman’s role is designated by the president; it is not a Senate-confirmed position.)

That change may be imminent, as indicated by a press release Hood issued Tuesday. In the release, Hood outlined his “select accomplishments” since he was sworn in as chairman in April 2019. The release is six pages long and contains just under 4,000 words.

“In 2021, I look forward to working with my fellow Board Members, the NCUA staff, and stakeholders in the credit union system to create a modern regulatory structure that fulfills our obligations to credit unions and their members, fosters innovation and financial inclusion, and protects the National Credit Union Share Insurance Fund,” Hood stated in the release.

In another signal of his perhaps impending status change as chairman, Hood Tuesday issued a statement thanking his (perhaps departing soon) deputy chief of staff Gisele Roget “for her leadership during his tenure” as chairman.

Hood’s term as an NCUA Board member runs to August 2023; Harper’s term runs to April of this year. However, he may remain in office until a successor is confirmed by the Senate.

While these changes may be coming, one has already occurred at the regulator of national banks – and even more change there is likely.

On Jan. 14, acting Comptroller Brian P. Brooks stepped down from his position after serving only eight months in the job. Brooks had been nominated by Trump on Jan. 3 to a full five-year term as head of the OCC. However, the Senate has not taken up the nomination and – after Biden is sworn into office and the Democrats take over control of the body on Wednesday (Jan. 20) – that nomination will likely die, be withdrawn by Biden, or both.

In the meantime, Brooks named Blake Paulson acting comptroller. A 34-year veteran of the OCC, Paulson had been chief operating officer of the agency. He is the fourth person to serve as comptroller or acting comptroller during the Trump administration – preceded by Keith Noreika (acting), Joseph Otting (confirmed by a five-year term, but who resigned after serving 29 months), and Brooks (acting). His tenure will likely be brief, as Biden will probably nominate a full-term (five-year) candidate for the job sometime this year.

There are other positions to be filled at federal regulators soon too, including:

  • A seat on the Federal Reserve Board, now that Trump’s nomination of Judy Shelton has essentially withered and likely will not be considered by the Senate (and perhaps withdrawn by Biden);
  • Vice chair for supervision of the Federal Reserve Board, currently held by Randal Quarles, whose term in that role ends Oct. 13 of this year (although his term as a member of the board runs to 2032);
  • Two seats on the Federal Deposit Insurance Corp. (FDIC) Board. Those are the now-vacant vice chairman’s seat and the seat now held by Board Member Martin Gruenberg, whose term expired in December 2018 (but who has been serving in a holdover capacity until his successor is confirmed by the Senate).

NCUA’s Accomplishments Marked by Regulatory Relief, Financial Inclusion, Response to COVID-19

Chairman Hood’s Statement on Deputy Chief of Staff Gisele Roget

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