Factbox – How Trump could overhaul US financial controls when he takes office via Reuters
Written by Michelle Price
WASHINGTON (Reuters) – President-elect Donald Trump is expected to overhaul U.S. financial regulators, which under Democratic President Joe Biden have pursued a raft of tougher rules on banks, private equity funds and other lenders. Here’s how Trump can control agencies when he takes office.
GRANTS AND USECHANGE COMMISSION
The SEC has five politically appointed commissioners, with the current balance being three Democrats and two Republicans.
Democratic SEC Chairman Gary Gensler said last week that he will step down in January, when Trump is expected to appoint one of the two Republican commissioners, Hester Peirce or Mark Uyeda, as acting chairman.
Trump also has the option of appointing Peirce or Uyeda to the role permanently, but Reuters and other news outlets have reported that his transition team is considering outsiders who must be confirmed by the Senate.
And last week, Democratic commissioner Jaime Lizarraga said he would step down in January, meaning Republicans would take control of the agency from January 20, allowing them to quickly begin overhauling crypto policy and other regulations.
ROSTIN BEHNAM COMMISSION CHAIRMAN FOR COMMERCIAL COMMISSION
The president chooses the CFTC’s chairman from among its five politically appointed commissioners, and the law does not explicitly say whether the president can fire a commissioner. However, the president may remove the chairman and install another commissioner. However, traditionally the chairman resigns if a different political party takes the White House.
It is expected that Trump will replace Democratic Alliance Chairman Behnam and install one of the Republican CFTC commissioners as acting chairman: Summer Mersinger or Caroline Pham. The permanent chairman must be confirmed by the Senate and Trump’s transition team is also considering foreign candidates, Reuters reported.
CONSUMER MONEY PROTECTION CENTER
In 2020, the US Supreme Court gave the president more authority over the Consumer Financial Protection Bureau, including giving him the power to fire its director at will.
Assuming Democratic CFPB Director Rohit Chopra does not resign, Trump is expected to remove him on day one, but the question of who would be acting director has historically been contentious. The Trump administration in 2017 asserted that it had the authority under the Federal Vacancies Reform Act of 1998 to appoint an acting director of the CFPB, while the agency’s deputy director at the time, Leandra English, said that under the Dodd-Frank Act of 2010 who created this organization. he was its rightful interim director.
The unusual dispute went to court and a federal judge in Washington sided with the Trump administration. The appeals court did not rule on the case.
CFPB experts believe that Trump can successfully cite the district court decision and the 2020 US Supreme Court decision when asserting his right to appoint an interim administrator.
Chopra’s permanent replacement will have to be confirmed by the Senate.
ACTING ACCOUNTANT MICHAEL HSU
Trump would have the power to quickly replace Acting Monetary Director Michael Hsu, the national bank’s regulator, with another acting custodian. That person can run the agency, potentially for years, until the Senate confirms a permanent director.
FEDERAL DEPOSIT INSURANCE CORPORATION
The FDIC is managed by a five-member politically appointed board, currently weighted three-to-two in favor of Democrats. Two of those positions must be filled by the financial regulator and the CFPB director.
Democratic Alliance chairman Martin Gruenberg said he will retire in January. With Senate confirmation of his successor, Democratic Biden nominee Christy Goldsmith Romero, now standing, FDIC Vice Chairman Travis Hill looks set to become acting chairman in January. He would have to be nominated by Trump and confirmed by the Senate to serve permanently.
With Hill in charge, and replacing Chopra or Hsu, Trump would give Republicans control of the agency, allowing them to quickly veto or amend a number of laws.
US FEDERAL RESERVE VICE CHAIRMAN MICHAEL BARR
The president can only fire Fed governors for cause, meaning Barr can remain in his role as central bank governor until his term expires in July 2026. He told Congress this month that he intends to serve out his full term.
The Washington Post reported last month that Trump’s transition team discussed removing Barr from his leadership position, though it was unclear whether the president had the authority to do so.
But by replacing Hsu and packing the FDIC board, Trump could control much of the banking regulatory agenda, and block any Fed projects the central bank and the other two agencies should work on. That would include the controversial Basel Endgame capital hike, plans to require regional banks to issue long-term debt, and new requirements that ensure banks have enough capital in times of stress.
