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Republicans are keen to weed out and consolidate many of the nation’s banking regulators, complicating the incoming administration of President Donald Trump’s efforts to find the heads of these watchdogs.
The problem is particularly acute for the Consumer Financial Protection Bureau, which focuses on how lenders treat their customers. The CFPB has been a target of Republican hostility since it was created after the 2008 financial crisis. Many experienced candidates balked when approached about the job, according to people familiar with the search.
“Republicans believe the CFPB is unconstitutional. Even if you make progress in protecting middle-class and low-income Americans, Democrats will never dismiss you for wearing the wrong color jersey. They wouldn’t appreciate it,” said a former senior financial regulator. I’m not interested in the job.
The current hiring problem is exacerbated by the growing debate among the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation over the consolidation of bank regulatory and supervisory responsibilities.
Some candidates were interviewed by Elon Musk and Vivek Ramaswamy, the heads of President Trump’s new advisory board, the Department of Government Efficiency (Doge), and have been interviewed by President Donald Trump, according to people close to the process. He was asked about rationalization.
Mr. Musk has advocated eliminating the CFPB, and Mr. Ramaswamy claimed on social media last week that the CFPB is “one of the easiest institutions to shut down.” The Wall Street Journal reports that some regulatory candidates have been asked whether it is possible to abolish the FDIC, which has protected bank depositors since the Great Depression.
The Trump transition team’s questions, coupled with the enthusiasm of Republicans who plan to run key committees on Capitol Hill to ease the regulatory burden, restructure the banking industry’s guardrails since the 2010 Dodd-Frank Act. This may signal the first full-scale effort to do so.
“I think the Trump campaign is thinking seriously about this,” said former FDIC Chairman Bill Isaac, “I think the Trump campaign is thinking seriously about this,” suggesting that the OCC, the Federal Reserve, and the FDIC should combine their oversight functions. He added that he had discussed his proposal to consolidate oversight functions with key officials on Capitol Hill. new regulator. “The system is broken.”
Republican Tim Scott, who has been tapped to chair the Senate Banking Committee, is concerned about the current structure of the U.S. banking regulatory system, his spokesman said, but he is not interested in consolidating banking regulators. He did not say whether he supported it. “I look forward to working with the incoming Trump administration to find solutions to streamline regulation, reduce red tape, and increase efficiency while ensuring the continued stability of the financial system,” said Scott. .”
But experienced Washington officials point out that previous attempts to merge the patchwork of banking regulators into a single super watchdog have failed. In 2010, Republicans cast a key vote to kill this idea.
“Although most regulatory scholars support some form of integration among U.S. banking regulators, these attempts have always failed. Each financial crisis has resulted in more regulation than before. There are more regulators,” said Aaron Klein, a senior fellow at Brookings University and a former Treasury official in President Barack Obama’s administration.
During President Trump’s first term, acting CFPB Director Mick Mulvaney at one point rejected requests for funding for the watchdog agency, but eventually resumed normal operations.
“Consequential structural change will require Congress, but it is extremely difficult to envision a scenario in which this issue will be on the table, let alone garner the Democratic support needed to pass legislation,” said Isaac Boltanski, managing director of BTIG. Needless to say,” he said.
Investor groups and former regulators say the FDIC is well-known and popular with consumers, in part because most banks tout deposit insurance as part of their advertising, weakening the FDIC. He has expressed caution about the outlook.
“The FDIC has an impeccable track record of protecting insured deposits for more than 90 years, and strong consumer trust in our brands provides stability in times of crisis,” said Sheila Baer, former FDIC Chair. Tweeted.
“While the FDIC’s seal of approval has protected depositors and the banking industry’s trust for nearly a century, the CFPB is a key contributor to financial reform,” said Patrick Woodall, managing director of policy at Americans for Financial Reform. “He has a strong track record of standing up for the cause.” little man Billionaire ideas about consumer protection and financial security are of no use to ordinary people. ”
Even Isaac said he opposes abolishing the FDIC as an independent agency, citing its responsibility to take over banks in emergencies.
“I don’t think it makes sense,” he said. The idea is to make the FDIC an independent, nonpartisan agency, which the Treasury Department never was. ”
President Trump’s transition team did not respond to requests for comment.