The upcoming Trump administration is reportedly struggling to find people to head America’s financial watchdogs.
The trouble lies with the Republican Party’s eagerness to eliminate or combine the nation’s banking regulators, the Financial Times (FT) reported Sunday (Dec. 15).
Perhaps the GOP’s top target, the report said, is the Consumer Financial Protection Bureau (CFPB). Sources tell the FT that several experienced candidates have declined when approached to lead the agency.
“Republicans think the CFPB is unconstitutional, and even if you do make progress in protecting middle-class and low-income Americans, the Democrats will never give you credit because you’re wearing the wrong color jersey,” said a former senior financial regulator who the FT says has no interest in the job.
As PYMNTS wrote soon after Trump’s election, the Supreme Court has held that the CFPB’s funding mechanism is constitutional, “in effect short-circuiting some conservative lawmakers’ efforts to raise existential questions about the bureau and pave the path toward its shuttering.”
That report also noted that one of the largest unanswered questions related to the CFPB and the new administration is the fate of the open banking rule, which was finalized and subsequently challenged in court by the industry. The CFPB says the rule promotes competition and protects consumer data.
“Banks have pushed back, charging that data-sharing has poorly defined parameters of liability and the compliance timelines are onerous,” PYMNTS wrote. “They also allege that the CFPB has overstepped its legal authority.”
The FT report also noted that some of the recruiting trouble comes from increasing calls to consolidate some of the duties of the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
Sources said that some possible candidates have been interviewed by Elon Musk and Vivek Ramaswamy, heads of Trump’s new Department of Government Efficiency and have been asked about streamlining regulation.
Musk has proposed doing away with the CFPB, while Ramaswamy argued recently on social media that the bureau would be “one of the easiest agencies to shut down.”
And as covered here last week, some members of Trump’s team have floated the idea of eliminating the FDIC and making deposit insurance a function of the Treasury Department. They’ve also proposed shuttering the CFPB or just limiting its duties to consumer education, and possibly combining the FDIC, OCC and Federal Reserve.
“I think the Trump team might be serious about this,” Bill Isaac, a former FDIC chair, told the FT.
He added that he has spoken with top lawmakers about his proposal to combine the OCC and the supervisory functions of the Fed and FDIC into a new regulator. “The system is broken.”
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