Unfilled positions threaten to slow implementation of president’s agenda
by Andrew Ackerman, December 3, 2021, Wall Street Journal
The White House’s desire to appease both liberal and moderate Democrats has left several top Wall Street regulatory posts unfilled, slowing the implementation of President Biden’s agenda nearly a year into the administration.
The president’s pick for comptroller of the currency, Saule Omarova, has drawn resistance from moderates, such as Sen. Jon Tester (D., Mont.). Mr. Biden’s renomination of Jerome Powell for Federal Reserve chairman was met with opposition from Elizabeth Warren (D., Mass.) and other liberals. And, in what could be viewed as an olive branch, Mr. Biden is considering nominating Richard Cordray, an ally of Ms. Warren, for the Fed’s top supervisory position.
There are also vacancies in top roles at the Federal Housing Finance Agency, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corp., and additional positions on the Fed’s board of governors to fill.
With a 50-50 split in the Senate, Mr. Biden needs either universal support of Democrats to confirm his nominees, or as is likely the case with Mr. Powell, support from some Republicans to overcome holdouts from his own party.
The slow-moving process could potentially force tough votes for Democrats ahead of next year’s midterm elections, while delaying the Biden administration from putting its stamp on financial rules. The administration is looking to revamp rules for lending in low-income communities and take steps to deal with what officials say are threats to financial stability posed by the rise of digital assets such as cryptocurrencies. Moves to consider reversing eased financial rules during the Trump administration are also on hold.
Implementing that agenda is harder without permanent leadership. “It’s imperative for the administration to pick their nominees and get them confirmed, because half the administration will be over before they’re up and running,” said Dennis Kelleher, chief executive at Better Markets, a group that advocates for stricter Wall Street oversight. “The agencies are by and large frozen in place and it’s hard to get momentum on critical financial protection rules until there’s confirmed leadership.”
A White House spokeswoman said the confirmation process has slowed because of Republican obstructionism. “Delays in confirmation are due to Republicans who have slow-walked nominees across the board,” she said.
A spokesman for Senate Minority Leader Mitch McConnell (R., Ky.) declined to comment.
Supporters say the administration can’t afford to move slowly on its remaining financial picks, with Democrats’ prospects in doubt for retaining control of the Senate past 2022.
The administration has had some successes, winning speedy confirmation for Gary Gensler to head the Securities and Exchange Commission in April. The Senate also confirmed Rohit Chopra as director of the Consumer Financial Protection Bureau at the end of September.
Delays and missteps for other top nominees have surprised Democrats who closely follow the process.
A case in point is Ms. Omarova, a Cornell University law professor Mr. Biden nominated last month to lead the Office of the Comptroller of the Currency, which oversees large national banks such as JPMorgan Chase & Co. and Wells Fargo & Co. White House allies say it was clear from the beginning of her nomination process that she would be difficult to confirm.
Despite taking the bulk of 2021 to settle on Ms. Omarova, opposition from a group of moderate Democrats who hold the key to her nomination has likely scuttled her prospects for confirmation.
Ms. Omarova’s earlier calls for shrinking big banks and creating a much bigger role for the Fed in consumer banking fueled a backlash from industry advocates, including community lenders, and Republicans. Meanwhile, supporters fault the administration for not coming to her defense sooner, after weeks of Republican attacks portraying Ms. Omarova, who was born in Kazakhstan, as a socialist.
After a group of moderate Democrats privately signaled they are opposed to Ms. Omarova’s nomination last week, the White House released a statement decrying “unacceptable red baiting from Republicans” and saying it still strongly supports Ms. Omarova for the post.
The White House is weighing whether to push her nomination through the Senate Banking Committee, or withdraw it, according to people familiar with its thinking.
Other nominations are also moving slowly. The White House had identified a candidate to become director of the Federal Housing Finance Agency, which oversees government-controlled mortgage giants Fannie Mae and Freddie Mac, Congressional and regulatory officials said. But the administration held off on its plans amid pushback from congressional Democrats, including prominent members of the Congressional Black Caucus, who support Sandra Thompson, a career regulator serving as acting head of the agency.
Democratic-party politics are also making it challenging for the administration to fill vacancies on the Fed. Those tensions were on display last week, when Mr. Biden renominated Mr. Powell, a Republican, for another term as Fed chairman.
It isn’t clear yet where the administration will land on another top Fed vacancy, the central bank’s vice chair of banking supervision, the government’s most influential overseer of the U.S. banking system. Mr. Biden can nominate individuals for two additional Fed seats.
Mr. Biden is considering Mr. Cordray, who served as the director of the Consumer Financial Protection Bureau from 2012 to 2017, for vice chair of supervision, succeeding Federal Reserve governor Randal Quarles, who is leaving at the end of the year. Mr. Cordray’s nomination for the Fed post could hearten progressive Democrats who have called for the central bank to take a tougher approach to regulating big banks and addressing financial risks posed by climate change. Ms. Warren has privately pushed senior White House officials to consider Mr. Cordray for the role, one of the people familiar with the matter said.
Mr. Cordray and Ms. Warren declined to comment. The White House said last week it would announce additional Fed appointments beginning in early December.
The White House’s slowness in picking a successor to Mr. Quarles means his seat will likely remain vacant for a while, according to bank-policy analysts. Ian Katz, a policy analyst at Capital Alpha Partners, described the indecision over the seat as an “own goal” by the Democrats.
Write to Andrew Ackerman at [email protected]