The day before a Senate committee considers the nominations of five prospective members of the Federal Reserve Board – including the chair and both vice chairs, federal financial institution regulatory agencies find themselves with tenuous leadership, as leaders of all but one agency are either in acting capacities or past the end of their terms – or both.
The four agencies and their leadership are: Federal Reserve Board and its chair, Jerome H. (“Jay”) Powell; Office of the Comptroller of the Currency (OCC) and its leader, Acting Comptroller Michael J. Hsu; Federal Deposit Insurance Corp. (FDIC) and its leader, Acting Chairman Martin J. Gruenberg; and National Credit Union Administration (NCUA) Board Chairman Todd Harper.
The leader of the fifth federal financial institution regulator – Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB) – was confirmed by the Senate in September for a five-year term on a vote of 50-48.
The four chief regulators in tenuous positions may be placed in one or more of three categories – with three of the four qualifying for two of the categories, and one of those for all three. Those categories are: serving in an “acting” capacity, nominated for another term, and “on the bubble,” in that they are serving terms that have expire but are either waiting to be confirmed to a new term, or for someone to replace them.
Further, two of the three agencies whose leadership is shared among appointed boards – the Federal Reserve and the FDIC – are short of their full complement of members (the NCUA, the third agency whose leadership is made up of a board, has for now its three members’ seats occupied).
Here’s how the leadership situation breaks down:
Acting: Three regulatory agency leaders are seated in an “acting capacity” – Powell at the Fed (technically a “temporary” position); Gruenberg at the FDIC; and Hsu at the OCC.
Powell is currently the “chairman pro tempore” of the Federal Reserve Board, since his term as chairman expired Feb. 5. His colleagues on the board voted to keep him in the chair’s seat – at least until his nomination for another term is resolved in the U.S. Senate. Until then – sometime this spring, most likely – Powell is the “temporary” chair of the central bank board. His first four-year term as chair came in 2018 after nomination by former President Donald Trump (R). President Joe Biden (D) in November of last year renominated Powell for another four-year term as chair. The Banking Committee is expected to recommend his confirmation to the full Senate with none or few “no” votes, primarily because of bipartisan support. His nomination has not yet been scheduled for consideration by the full Senate.
Michael Hsu is serving in an acting capacity while heading up the OCC, a position he assumed in May 2021. President Biden nominated a permanent comptroller last fall for a five-year term. However, nominee Saule T. Omarova withdrew her name from consideration in December, after strong (and sometimes virulent) opposition from both the banking industry and Republican senators, who cast her past writings on bank regulation as supportive of bank regulation that would “effectively nationalize America’s community banks.” The White House has yet to tap another nominee to a five-year term for the post.
Martin Gruenberg became acting chairman of the FDIC Board on Feb. 5 following the resignation of former Board Chairman Jelena McWilliams, who gave no indication of a reason for her departure, three-and-a-half years into her five-year term. (McWilliamsshe was nominated by President Trump in December 2017 and confirmed by the Senate in late May 2018.) Gruenberg, a member of the FDIC board since August 2005 – and the longest-serving board member in the agency’s history – is now in his third stint as acting chairman, having previously held the role from November 2005 to June 2006 and again from July 2011 to November 2012. He ascended to a five-year term as chairman in 2012, serving through June 2018 in that role. His term as a board member ran out in December 2018; he has been serving as a holdover since then. He is now the only “appointive” member of the board as the other two seats are now empty. Those are member of the board and vice chairman – a seat he has also held in his long tenure at the agency.
Nominated: Powell’s nomination to continue as Fed chair is widely expected to be recommended to the full Senate by the Banking Committee at its Tuesday hearing. Powell is also expected to be easily confirmed by the Senate, whenever that vote comes before the full body.
Harper’s confirmation was recommended to the full Senate by the Banking Committee last month, on a relatively lopsided, bipartisan vote of 17-7. That outcome could foretell a similar result in the full Senate. However, unlike Powell, Harper is a Democrat, appointed to his current role as board chairman by Biden – and that could give Republicans in the full body pause. On the other hand, Harper was originally tapped for the NCUA Board seat by former President Trump, which may bode well for his future among GOP members.
On the bubble: Three current regulators are serving as “holdovers” on the leadership boards of their agencies: theNCUA’s Harper, the FDIC’s Gruenberg and the Fed’s Powell. If two are not confirmed by the Senate – and, instead, a successor is nominated and confirmed – their stints on their respective boards will end.
Harper’s term officially ran out in April 2021; he’s been serving as a holdover since then until a successor is confirmed by the Senate (which will be him). Under the Federal Credit Union Act, NCUA Board members generally cannot be appointed to succeed themselves. There are a couple of exceptions, however, including that someone appointed to fill an unexpired term may be reappointed for a full six-year term, which is the case for Harper.
Powell stands the best chance to continue in his role for the next four years – and to remain as a Fed Board member beyond that, if he chooses to, since his term runs to 2028. He is the only one of the four regulators to have the distinction of being in all three categories: acting, nominated, and “on the bubble.”
Gruenberg’s future at the FDIC is less certain: The White House has given no indication of appointing a successor, as either chairman of the board or as a member to take Gruenberg’s seat. Under the Federal Vacancies Reform Act of 1998 (FVRA), an “acting” incumbent may remain in that post for an additional 210 days if a nomination is made for someone to take the position permanently (that is, as long as the nomination is not confirmed).
And there is more to come: Tuesday’s Senate Banking Committee confirmation vote will consider the nominations of four more Federal Reserve Board members: Lael Brainard, a current board member to serve a four-year term as vice chair; Sarah Bloom Raskin, nominated as a member of the board and, separately, for a four-year term as vice chair for supervision; and Lisa DeNell Cook and Philip Nathan Jefferson for seats on the board.
All but Jefferson have received opposition from Republican senators.
Meanwhile, there are two appointive seats unoccupied on the FDIC Board: for a member and vice chairman. The White House has not yet named candidates for those seats either. The five-member FDIC Board is filled out by the CFBP Director (Chopra) and the acting Comptroller of the Currency (Hsu) – both of whom were named by Biden to their roles.