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Republican enthusiasm for culling and merging several banking regulatory agencies in the United States is complicating efforts by the incoming Donald Trump administration to find the heads of those regulatory bodies.
The problem is particularly acute for the Consumer Financial Protection Bureau, which focuses on the way lenders treat customers. The CFPB has been a target of hostility from Republicans since its creation after the 2008 financial crisis. People familiar with the search process said a number of experienced candidates objected when contacted about the job.
“Republicans believe the CFPB is unconstitutional, and even if you make progress in protecting middle-class and low-income Americans, Democrats will never give you credit because you're wearing the wrong color shirt,” said one former top financial regulator. Not interested in the job.
Recruitment issues have become more serious because of growing anger over the consolidation of banking regulatory and supervisory responsibilities currently divided between the US Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
Elon Musk and Vivek Ramaswamy, heads of Trump's newly created advisory committee, the Department of Government Efficiency (Doge), interviewed some potential candidates and were asked about streamlining the organization, people close to the process said.
Musk has called for the CFPB to be abolished, and Ramaswamy confirmed last week on social media that it was “one of the easiest agencies to shut down.” The Wall Street Journal reported that some regulatory candidates were asked whether it would be possible to eliminate the Federal Deposit Insurance Corporation (FDIC), which has protected bank depositors since the Great Depression.
The Trump transition team's questions, combined with the enthusiasm of Republicans set to run key Capitol Hill committees to ease the regulatory burden, could herald the first serious effort to reshape the banking industry's guardrails since the 2010 Dodd-Frank Act.
“I think the Trump team may be serious about this,” said Bill Isaacs, former head of the Federal Deposit Insurance Corporation, adding that he had spoken to senior officials on Capitol Hill about his proposal to merge the Office of Foreign Transactions Coordination and the supervisory functions of the Federal Reserve and the FDIC into One entity. New organizer. “The system is broken.”
A spokesman for Tim Scott, the Republican who chairs the Senate Banking Committee, said he had concerns about the current structure of the US banking regulatory system, but did not specify whether he supported consolidating banking regulators. Scott looks forward to working with the incoming Trump administration to find solutions to simplify regulation, reduce red tape, and increase efficiency while ensuring the continued stability of our financial system.
But experts in Washington point out that multiple previous attempts to unify the patchwork of banking regulators into one super-regulatory body have failed. In 2010, Republicans provided crucial votes to help kill the idea.
“Most regulatory scholars support some form of consolidation among U.S. bank regulators, but every attempt to do so has failed,” said Aaron Klein, a senior fellow at the Brookings Institution and a former Treasury official under Barack Obama. “There is more regulation and more regulatory bodies than there used to be.”
During Trump's first term, acting CFPB Chairman Mick Mulvaney at one point declined to request any funding for the watchdog, but it eventually resumed normal operations.
“Congress is needed for any subsequent structural changes, and it is very difficult to envision a scenario where this issue would be on the agenda, let alone get the Democratic support necessary to pass the law,” said Isaac Boltanski, managing director at BTIG.
Previous investor groups and regulators have expressed alarm about the potential weakening of the FDIC, noting that it is well-known and popular among consumers, in part because most banks promote deposit insurance as part of their advertising.
“The FDIC has an exemplary record of protecting insured deposits for over 90 years. Strong consumer confidence in brand, provides stability during crises,” tweeted Sheila Bair, former chair of the FDIC. “.
“The FDIC’s stamp of approval has protected depositors — and trust in the banking industry — for nearly a century, while the CFPB has a proven track record,” said Patrick Woodall, managing director of policy at Americans for Financial Reform. In defense of depositors. Little man. Billionaires' ideas about consumer protection and financial stability will do nothing for ordinary people.
Even Isaac said he opposes eliminating the FDIC as an independent agency, because of its contingent responsibilities in taking over banks.
“I don't think that makes sense,” he said. “The idea is for the FDIC to be an independent, bipartisan agency, and the Treasury Department is not.”
Trump's transition team did not respond to a request for comment.
