Biden Administration Makes Progress on Appointing Lead Financial Services Regulators

Eversheds Sutherland (US) LLP
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In September, Biden nominated Saule Omarova to head up the OCC as Comptroller of the Currency1 after a months’ long candidate search. Earlier this year, potential nominees for the Comptroller included Michael Barr, who appealed to moderate Democrats but garnered criticism from progressives who viewed him as too deferential to OCC-supervised banks, and Mehrsa Baradaran, who was favored by progressives but was feared too far left to gain support from the moderate wing of the Democratic party. Those candidates eventually dropped out of contention, creating uncertainty as to whom Biden would tap to lead the OCC until the announcement of Omarova’s nomination last month. 

If confirmed, Omarova would be the first woman and the first nonwhite person to lead the OCC. She is currently a professor of law at Cornell University and, prior to that, taught at the University of North Carolina. Before joining academia, Ms. Omarova practiced law at Davis, Polk & Wardell, and then served as a special advisor for regulatory policy at the U.S. Department of Treasury during the George W. Bush administration.  

Omarova’s nomination remains subject to Senate confirmation. Her confirmation by the Senate may prove difficult, however, given the 50-50 Democrat/Republican split in the Senate and speculation that some of Omarova’s positions in academic papers and public speaking engagements will prove too progressive for Republicans and possibly even some moderate Democrats. For example, in a paper titled “The People’s Ledger: How to Democratize Money and Finance the Economy,” Omarova  argues for a fundamental restructuring of the financial system, including a proposal to move all transaction deposit accounts from private banks to the Federal Reserve. While Omarova prefaces her paper as a thought experiment, it has already provided fodder for those who oppose her nomination. 

Omarova is also expected to take a skeptical look at the involvement of fintechs in financial services. Her academic work has focused on issues around systemic risk on the financial system, including concerns around risk leaking over to the financial system from less regulated fintechs. Omarova has warned of risks to the financial system posed by cryptocurrencies and other digital assets for which regulation is not fully developed and which could lead to a dangerous, undetected build up in systemic risk. Industry participants have expressed concern that these kinds of stances by Omarova portend stricter regulatory scrutiny of cryptocurrencies and other fintech initiatives, which could stifle innovation.2

September also saw the confirmation of Rohit Chopra as the new permanent Director of the Consumer Financial Protection Bureau, replacing acting Director Dave Uejio. Chopra was confirmed by the Senate on September 30 by a party-line vote of 50-48. Chopra is expected to revitalize the Bureau’s enforcement activity after a period of relatively less ambitious enforcement by the Bureau under the Trump administration. Prior to Chopra’s confirmation as Director of the CFPB, he was a Commissioner at the FTC. Under Chopra’s leadership, we can expect to see from the CFPB increased rulemaking and more aggressive enforcement actions. 

President Biden nominated Alvaro Bedoya to fill the FTC Commissioner position left vacant by Chopra. Bedoya is currently a professor and founding director of the Center on Privacy & Technology at Georgetown Law. He also served as chief counsel to the U.S. Senate Judiciary Subcommittee on Privacy, Technology, and Law. Bedoya is known as a strong privacy advocate, and his work in academia has focused in part on how the use of data, facial recognition and other technologies can have disparate impacts on immigrants and people of color. Bedoya is expected to be a leading voice on privacy matters at the FTC and may join FTC Chair Lisa Khan to bring increased FTC scrutiny to big tech.

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1 https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/23/president-biden-announces-key-nominations-for-financial-regulation-and-investor-protection/
2 See e.g., https://www.rollcall.com/2021/10/12/critics-supporters-see-bidens-occ-nominee-reining-in-fintech/

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