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Tom Curry
With the ushering in of a new year, the federal financial regulatory agencies have seen a flurry of appointments and resignations, further setting the stage for increased influence by the Biden administration with respect to financial regulation and policy.
During the week of Jan. 10, the U.S. Senate Banking Committee held confirmation hearings on Jerome Powell’s reappointment as chair of the Federal Reserve Board, quashing speculation that President Joe Biden would choose to fill the role with a progressive Democrat. Lael Brainard, a long-time member of the Board of Governors, also had a confirmation hearing, and if confirmed will serve with Powell as vice chair.
Prior to his role as chair, Powell had decades of experience both in the public and private sectors. He joined the Treasury Department under President George H.W. Bush as an assistant secretary and undersecretary after years spent in private practice as an attorney and investment banker. During his time at the Treasury, he focused primarily on policy with respect to financial institutions and the Treasury debt market. Powell then went back to the private sector before his appointment to the Federal Reserve Board, spending time in the private equity space and as a visiting scholar at the Bipartisan Policy Center in Washington, D.C.
Kate Henry
Powell was appointed as chair of the Federal Reserve by President Donald Trump in 2017 and has been applauded for his response to the COVID-19 pandemic, namely for slashing interest rates and putting into effect emergency economic relief programs to combat the economic downturn associated with the pandemic. Although this policy has had the impact of significantly increasing inflation, during his Jan. 11 confirmation hearing testimony Powell indicated that he is confident that inflation will decrease as the effects of the pandemic begin to subside.
Appointments Diversify Fed
In addition to Powell’s reappointment, President Biden named Lael Brainard as vice chair, making Brainard the second-highest ranking member of the Federal Reserve. Brainard also spent the early part of her career both as a member of the National Economic Council under the Clinton administration, and in the Treasury, acting as undersecretary for international affairs under the Obama administration. With a reputation as a meticulous and thoughtful leader, her collaboration with Powell, especially with respect to the Federal Reserve’s response to growing inflation, will bring decades of policy experience to the central bank’s highest echelons.
Armand J. Santaniello
On Jan. 14, President Biden announced his nomination of law professor Sarah Bloom Raskin, a former Maryland bank supervisor, Federal Reserve governor and deputy secretary of the treasury, to serve as vice chair for supervision. He also nominated Lisa Cook and Philip Jefferson to serve as governors on the Federal Reserve Board.
If confirmed, Cook will be the first Black woman in history to serve on the Board of Governors. Cook is currently a professor at Michigan State University, where she focuses on macroeconomics, economic history, international finance and innovation. Cook was a member of the Council of Economic Advisors during the Obama administration and has held various public and private sector visiting appointments, including with the Federal Reserve Banks of Chicago, New York, Minneapolis and Philadelphia. Jefferson currently serves as the vice president for academic affairs and the dean of faculty at Davidson College, with previous experience as an economist for the Federal Reserve Board.
These appointments are significant from the standpoint of increasing both racial and gender diversity on the Federal Reserve Board.
Resignations Open Opportunities
In addition to these high-profile nominations, there have been a number of widely publicized resignations of other financial regulators, both within the Federal Reserve System and in other agencies. On Jan. 10, Federal Reserve Vice Chair Richard Clarida announced his resignation from the Board of Governors amid questions about certain stock trades he made during the COVID-19 pandemic.
Federal Deposit Insurance Corp. Chairman Jelena McWilliams also recently announced her resignation. effective Feb. 4. McWilliams’ decision comes in the wake of a very public disagreement between members of the FDIC board with respect to procedural formalities required to present a proposal for a board vote that would have updated the interagency Bank Merger Act guidelines.
McWilliams’s resignation creates an opportunity for filling additional openings on the FDIC board for President Biden. Veteran FDIC board member Martin Gruenberg is slated to step in as acting chair. The position of FDIC vice chairman remains vacant and was not filled throughout the Trump administration. It is not clear when President Biden would nominate individuals to serve as FDIC chairman and vice chairman.
As positions continue to shift within the federal financial regulatory agencies, the Biden administration will be provided with more opportunities to shape the economic landscape both in the continuing COVID-19 pandemic and the post-pandemic environment to come. Bank regulatory rules and policies, merger review criteria and climate change issues are expected to receive greater attention once the new nominees are confirmed and in office.
Thomas J. Curry is a partner in Nutter’s corporate and transactions department. Kate Henry and Armand J. Santaniello are associates in Nutter’s corporate and transactions department. Curry is former U.S. comptroller of the currency and all are members of the firm’s banking and financial services group.
