Contenders Emerge for Fed Bank Oversight Post, Trump Budget Chief
December 04 2016 - 11:59AM
Dow Jones News
By Ryan Tracy and Nick Timiraos
WASHINGTON -- A senior regulator, a former banker and a
consultant have emerged as early contenders for one of the most
powerful U.S. financial regulatory jobs, as President-elect Donald
Trump's transition team looks to nominate a Federal Reserve vice
chairman in charge of bank oversight, according to people briefed
on the matter.
Meanwhile, David Malpass, a senior economic adviser on the
transition team, is being considered to run the White House Office
of Management and Budget, according to people familiar with the
transition discussions. Mr. Trump met with the former Bear Stearns
chief economist on Friday.
Transition officials also are considering Gary Cohn, operating
chief at Goldman Sachs Group Inc., for a senior economic position,
said people familiar with the matter. Mr. Cohn, who could be in the
running for the OMB director role, also met with Mr. Trump last
week.
The Trump administration's economic and financial team began to
take shape with the Wednesday announcement that former Goldman
executive Steven Mnuchin was the president-elect's choice to become
Treasury secretary. Now Messrs. Trump and Mnuchin along with
transition officials are looking to round out the economic and
regulatory team.
Mr. Mnuchin said last week that filling the Fed banking post was
a priority for the administration, though officials cautioned the
discussions still remain in the early stages and that new
candidates still could emerge.
The main contenders for the fed vice chairman role at this point
include Federal Deposit Insurance Corp. Vice Chairman Thomas
Hoenig, former BB&T Corp. chief John Allison, and Paul Atkins,
a former member of the Securities and Exchange Commission who
founded the consulting firm Patomak Global Partners LLC and is
playing a leading role on the Trump transition team's work on
financial regulatory policy.
The Fed banking supervision post was created by Congress in
2010, but hasn't been filled. Fed governor Daniel Tarullo, who has
been effectively doing the job, has used the role to exert
significant influence over the largest U.S. banks. His term as fed
governor expires in 2022, though he could step down sooner. Any
nominee to the vice chairman role would need to be confirmed by the
Senate.
All three contenders have been critics of the financial
regulatory overhaul that Mr. Tarullo and others led following the
2008 taxpayer-funded bank bailouts.
Mr. Hoenig, a bank regulator for decades as head of the Federal
Reserve Bank of Kansas City, supports aspects of the 2010
Dodd-Frank law but has said it didn't go far enough in curtailing
the risks at big Wall Street banks. That has made him enemies on
Wall Street, but has endeared him to small and midsize banks. A
political independent, he is liked by lawmakers on both sides of
the aisle.
Mr. Allison led the expansion of BB&T from a small lender to
one of the largest banks in the country during two decades atop the
firm. He is a libertarian who has said Dodd-Frank created
unnecessarily onerous rules and suggested getting rid of the
Fed.
Of the three, Mr. Atkins appears to have the least experience in
the banking sector. But he has deep experience with
securities-market oversight, an area where the Fed has played a
larger role in recent years.
Mr. Atkins also appears to be the closest of the three to Mr.
Trump's inner circle, having gained a key role in shaping financial
regulatory policy and leading "landing teams" Mr. Trump sent to
assess bank regulatory agencies. He is expected to gain at least
some role in the new administration, including possibly returning
to the SEC as its chairman.
Beyond the Fed job, the Trump team has been having active
discussions with prospects for OMB director. They raised the idea
with Texas Rep. Jeb Hensarling, who also had been on the shortlist
for Treasury secretary. Mr. Hensarling turned them down to keep his
powerful perch as head of the House Financial Services Committee,
where he is planning to lead the charge to overhaul Dodd-Frank.
Now Mr. Malpass has emerged as contender for that slot. Mr.
Malpass has served in previous Republican administrations and as a
top Capitol Hill staffer, giving him extensive experience on tax,
trade and budget issues and in dealing with Congress. The economist
worked on the 1986 tax-code revamp, the North American Free Trade
Agreement and several congressional budget resolutions.
Mr. Cohn, the operating chief at Goldman, is also under
consideration for OMB director, a move first reported by Politico,
along with other economic posts. Mr. Cohn joined Goldman and became
a partner in 1994, the same year as Mr. Mnuchin.
The OMB job also could serve as a steppingstone to other top
government posts. Treasury Secretary Jacob Lew held the post in
both the Obama and Clinton administrations.
Nominating a Goldman executive could open Mr. Trump to
criticism. He already has tapped two other Goldman alumni,
including Mr. Mnuchin and top White House adviser Steve Bannon.
"It does concern me that they would have a lot of swing from one
company in major positions in our government," said Sen. Jon Tester
(D., Mont.) in an interview. "That is not a good sign. It won't
result in good government."
Write to Ryan Tracy at ryan.tracy@wsj.com and Nick Timiraos at
nick.timiraos@wsj.com
(END) Dow Jones Newswires
December 04, 2016 11:44 ET (16:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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