Wall Street is feeling a bit uneasy with President-elect Joe Biden’s SEC and CFPB appointments. On Monday, Biden’s transition team announced two consumer advocates will lead top financial agencies. Former CFTC commissioner Gary Gensler will head the Securities and Exchange Commission (SEC). Meanwhile, FTC member Rohit Chopra will lead the Consumer Financial Protection Bureau (CFPB). For Wall Street, this means tougher days and increased oversight are ahead.
Gary Gensler and Rohit Chopra
As Commodity Futures Trading Commission chair from 2009 to 2014, Gensler tightened controls for the industry after the financial crisis. He implemented new swap trading rules made by Congress.
Gensler became a hard-nosed regulator that often stood up against Wall Street. As chairman of the SEC, progressives expect Gensler to pursue new corporate disclosures on climate change risks. He will also look into political campaign contributions and managing company workforces. Gensler will also look into continuing the moves to curb excessive executive compensation.
Meanwhile, Chopra helped form the CFPB, also after the financial crisis. He served as the first student loan ombudsman. At the FTC, Chopra pushed for tougher rules for consumer privacy and competition. He also has his eyes set on reviewing debt collection and abusive lending rates. Also, Chopra needs to address student debt and gaps in minorities’ credit access.
As expected, progressives hailed the choice of the two officials. They see both the SEC and CFPB as important agencies that can help with social justice and climate change. In particular, the “CFPB has an incredibly important job to do, including stopping financial rip-offs,” according to Lisa Donner, of Americans for Financial Reform. “It also has an urgent role to play in helping families survive and recover from the pandemic-induced economic crisis,” she added.
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The new Democrat majority opens up the Senate Banking Committee leadership to Senator Sherrod Brown (OH). He opposed President Donald Trump’s relaxing of Wall Street rules. He said the CFPB “plays a leading role in combating racial inequities in our financial system.” Meanwhile, Gensler’s hiring hopes to “hold bad actors accountable” and put “working families first.”
Meanwhile, Republicans find the choices are pandering. Leading GOP officials criticized Biden for kowtowing to progressives and risking divisiveness. Representative Patrick McHenry (NC), a leading Republican in the House Finance panel, said Chopra’s nomination leads to the far-left. While acknowledging Gensler “The Biden team is pandering to members of the far-left,” Patrick McHenry, lead Republican on the House of Representatives finance panel said of Chopra.
He did have mixed reviews of Gensler’s nomination, saying that“Gary’s acceptance of financial technology and cryptocurrency is a welcome change from many Democrats who avoid innovation just because they don’t understand it.” But, he also warned that Gensler should “resist pressure to commandeer our securities disclosure regime to try to fix non-economic issues or social problems.”
Removing the Current CFPB director
Chopra’s nomination means Biden needs to fire current CFPB director, Kathy Kraninger. Last year, the Supreme Court ruled that the CFPB post is an at-will position. Add Biden’s announced nomination of Chopra, and Kraninger will have to go. Richard Hunt, Consumer Bankers Association CEO, thinks that Biden shouldn’t act immediately. “CBA does not believe it is in the best interest of consumers to have a new Director with each change in Administration. This whip-saw effect will stifle innovation and prevent consistent regulations,” Hunt said.
Watch the CBS News reports on President-elect Joe Biden names key financial nominees Rohit Chopra and Gary Gensler:
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