Who would craft regulatory policy in a Biden administration?
If Democrat Joe Biden wins the presidential election, he could choose from a crop of Democratic state officials, members of Congress and others for top bank regulatory jobs.
In addition to nominating a Treasury secretary, replacing CFPB Director Kathy Kraninger would likely be high on the list of priorities for a Biden administration following a Supreme Court ruling earlier this year that allows the president to fire the CFPB head. Meanwhile, a Biden White House could potentially select a new head of the Office of the Comptroller of the Currency, since Brian Brooks is only the acting comptroller.
Most national polls show Biden with an advantage over President Donald Trump one day before Election Day, but many commentators expect the battle for the Electoral College to be close.
Should Biden win, many expect a change at the CFPB could be announced as early as January.
“For consumers, replacing the CFPB director is the most important decision that can be made off the bat,” said Jeremy Kress, an assistant professor of business law at the University of Michigan’s business school. “The CFPB carries a level of symbolism and visibility that the OCC does not, and a Biden administration might want to highlight that role.”
The CFPB director also sits on the board of the Federal Deposit Insurance Corp. and the Financial Stability Oversight Council, and therefore could weigh in on safety and soundness policy.
The top names being floated for the CFPB in a Democratic administration include Rep. Katie Porter, D-Calif., a former law professor at the University of California, Irvine School of Law, who studied under Sen. Elizabeth Warren, D-Mass., when she was a law professor; and Rohit Chopra, a former assistant director at the CFPB who is currently a member of the Federal Trade Commission.
If Trump wins, the status quo would likely remain. Kraninger's term does not expire until 2023. A Trump appointment to head the OCC either in a lame-duck period or afterward would likely reflect the current administration's deregulatory priorities. The current terms of Federal Reserve Chair Jerome Powell and FDIC Chair Jelena McWilliams expire, respectively, in 2022 and 2023.
But who ultimately could become CFPB director in a Biden administration may also depend on the balance of power in Congress, where Democrats are trying to take back control of the Senate. Some candidates vying for the job could end up filling other slots in a Biden administration.
"There are some people who could reasonably slot into multiple different positions at the Treasury or the Fed," said one policy analyst who spoke on the condition of anonymity.
Many expect a CFPB director in a Biden administration would need the blessing of Warren, the agency’s architect.
“Sen. Warren is going to have a say in who gets that seat,” said Isaac Boltansky, director of policy research for Compass Point Research & Trading. “The real caveat is how much of a majority the Dems have in the Senate.”
Both Porter and Chopra could hit the ground running. A major caveat for Porter is that she also is considered a contender for the Senate seat that would be vacated by vice presidential candidate Kamala Harris.
Chopra, meanwhile, has stood out as an FTC critic of the Trump administration and a vocal supporter of consumer rights. Because he already has been confirmed by the Senate, he also could fill the CFPB role on an acting basis.
If Democrats do not win a majority in the Senate, appointing a replacement for Kraninger may be tougher.
The next CFPB director also could come from the ranks of state attorneys general. For example, New York Attorney General Letitia James and California Attorney General Xavier Becerra have taken tough stands on enforcing consumer protection laws.
Other names that have been floated for the CFPB job include Chris Peterson, the Democratic gubernatorial candidate in Utah. Peterson, a law professor at the University of Utah, is a former special adviser to former CFPB Director Richard Cordray.
Another dark-horse candidate is Michael Barr, a former Treasury assistant secretary in the Obama administration who was a key architect of the Dodd-Frank Act and served on the National Economic Council. Barr, now a law professor at the University of Michigan, had been a special assistant and deputy assistant secretary of the Treasury in the Clinton administration and decades ago co-wrote legal articles with Warren.
One candidate floated for the acting CFPB post is Patrice Ficklin, the bureau’s current director of fair lending, who stayed on for three years under the Trump administration. Ficklin, currently a senior CFPB official, fits the requirements for temporary appointments under the Federal Vacancies Reform Act.
A Biden administration would face tremendous pressure to name more women and minority candidates to top posts.
Filling agency slots can be difficult for a presidential transition team. For every open position there are dozens of candidates. The transition teams for each agency are tasked with coming up with candidates from a pool of lawmakers, public interest groups and the private sector, though insiders play a bigger role.
Some predict a Biden transition team would need to side with either progressives led by Warren and Sen. Bernie Sanders, I-Vt., or moderates.
“There is going to be a battle during the transition between the Warren-Sanders wing of the party and the Wall Street wing, and I think each side will get something they are happy with and upset about,” said Kress.
Some candidates have also been floated for Treasury secretary in a Biden administration. Rhode Island Gov. Gina Raimondo is reportedly among those being looked at for the cabinet position. Politico also reported that Warren plans to vie for the position herself if Biden is elected.
Other potential Treasury secretary picks include Federal Reserve Gov. Lael Brainard and former Fed Vice Chairman Roger Ferguson, but Ferguson also could be considered for the comptroller job.
If Biden wins and Trump does not appoint a permanent comptroller during the lame-duck period, the next Treasury secretary would have the statutory authority to remove current acting Comptroller Brooks and name a first deputy comptroller to replace him.
Other potential candidates for the OCC include Amy Friend, the OCC’s former senior deputy comptroller and chief counsel, currently a senior adviser at FS Vector, and Charles Yi, a former general counsel at the FDIC who is currently a partner at the law firm Arnold & Porter.
Other names on the transition team’s shortlist for comptroller include Manny Alvarez, commissioner of California’s Department of Financial Protection and Innovation and a former general counsel and chief compliance officer at the San Francisco installment lender Affirm.
A pick for acting comptroller could come from inside the agency, such as Grovetta Gardineer, the current senior deputy comptroller for bank supervision policy, who also serves on the OCC’s executive committee.
“There may be a period of significant stress in the banking system as nonperforming loans work through the forbearance and delinquency process on bank balance sheets,” said the policy analyst. “They want someone who understands the banking system, because they are going to have to deal with a crisis.”