Dive Brief:
- President Donald Trump intends to nominate acting Comptroller of the Currency Brian Brooks to a five-year term, the White House posted in a statement on its website Tuesday.
- The move, nine weeks before President-elect Joe Biden is set to take office, as various legal challenges from the Trump administration reach resolution, could force Biden's administration to lean on legal authority that has never been used if it wants to try to replace Brooks with its own nominee.
- Before that scenario has a chance to play out, Brooks must face a hearing before the Senate Banking Committee, and that panel must approve the nomination. Then, the full Senate must approve him before Jan. 20.
Dive Insight:
In his own statement Tuesday, Brooks called the move a "great honor," saying, "If confirmed, I will work ceaselessly to ensure the agency continues to fulfill its critical mission and the men and women of this agency have the resources, training, and leadership they need to succeed in their duties."
Brooks took over as acting comptroller in May after the regulator's previous chief, Joseph Otting, resigned.
The Office of the Comptroller of the Currency (OCC) is couched inside the Treasury Department, but is outside of the Treasury secretary's direct control. U.S. law states a comptroller serves a five-year term "unless sooner removed by the President ... upon reasons to be communicated by him to the Senate." That clause has not been tested, Bloomberg reported.
Among other regulators, Securities and Exchange Commission (SEC) Chairman Jay Clayton has indicated he'll leave his post before a Biden administration can take office. It is assumed others will stay. Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams, a Trump appointee, is expected to helm that agency until 2023. Fed Vice Chairman for Supervision Randal Quarles can stay in his position until late 2021.
Holdovers from previous administrations can slow regulatory agendas. Obama appointee Martin Gruenberg led the FDIC during Trump's first 17 months in office. Because significant changes to financial policy are often approved by several agencies jointly, the Trump administration's efforts to roll back bank regulation then often ran into roadblocks.
"Those people can stay in their jobs and be impactful," Tyler Gellasch, a former aide to a Democratic member of the SEC, told Bloomberg. "Executive branch agencies can turn over immediately, whereas the independent agencies have terms. It often slows things down."
However, as the recent nomination of Judy Shelton to serve on the Federal Reserve Board of Governors has shown, just because a president nominates someone to a position, Senate approval is not guaranteed.
Appointees — from either side — can look to make an impact promptly outside of full policy rewrites through fines and enforcement actions aimed at individual companies whose activities they oversee.
"The appointees will be very, very focused on what they can do quickly," Patricia McCoy, a Boston College law professor who specializes in financial regulation, told Bloomberg. "Setting new enforcement priorities can be done immediately."
