Trump’s Bank Regulators
ProPublica’s new web site “Trump Town” tracks political appointees across federal agencies. In light of the president’s promises to “drain the swamp”, it is interesting to peruse some of the Treasury Department appointees responsible for bank regulation. I previously wrote about Secretary Mnuchin and Comptroller Joseph Otting and their connections to subprime mortgage foreclosure profiteers. Lower-level political appointees at Treasury seem to come mostly from one of three backgrounds – lawyers and lobbyists for banks, real estate investors (and sometimes Trump campaign officials), or former staffers for Republican members of Congress. Here are some examples:
Brian Callanan was appointed Deputy General Counsel. The White House granted him an ethics rules waiver so that he will be able to participate in housing finance reform, in other words the redesign of mortgage funders Fannie Mae and Freddie Mac. This despite his prior employment with a law firm that is suing Fannie and Freddie on behalf of private investors who felt short-changed by the Fannie/Freddie bailout terms. In fairness, he does not appear to have personally handled the litigation. The firm where he worked represents “many of the nation’s largest financial institutions in disputes with federal banking regulators.” Before that he was a staffer for Senator Rob Portman’s (R-OH) committee.
Bimal Patel was appointed Deputy Assistant Secretary of the Treasury for the Financial Stability Oversight Council. He came over from white-shoe law firm O’Melveny & Myers, where he was Head of Financial Advisory and Regulation Practice; O'Melveny had in turn hired him from bank regulator FDIC. Here is how the law firm described his role:
Bimal Patel is the Head of the Financial Advisory and Regulation Practice and specializes in matters related to financial services, public policy, and political strategy. Bimal represents major financial institutions and their counterparties including sovereign wealth funds, hedge funds, and private equity funds in high-stakes complex transactions, litigation, and matters before the federal banking agencies and the Department of the Treasury. Bimal’s time with the FDIC allows him to provide financial sector clients with unique and valuable insight into the evolving cross-border regulatory issues that impact their business operations and investment decisions. He provides sound, strategic guidance to clients in highly scrutinized and politically sensitive matters.
Speaking of the Financial Stability Oversight Council Mr. Patel will be staffing, the President has appointed Thomas Workman to be a member of the FSOC. Mr. Workman is the former head of a New York insurance companies trade association. The Trump FSOC is expected to back off of regulating insurance companies as systematically important institutions, i.e. as too big to fail.
Bradley Rolison Bailey was appointed Deputy Assistant Secretary for Legislative Affairs. He was previously a registered lobbyist, working for clients including First American Financial Corporation, H & R Block, Inc., Lazard Freres & Co. LLC, Loan Syndication and Trading Association, and The Travelers Companies Inc. A 2015 New York Times wedding announcement identified him as having previously been a staffer to John Boehner (R-OH) on tax and trade policy.
Jelena McWilliams, nominated to chair the FDIC, moved from private law practice to the Federal Reserve legal staff to the Senate Banking Committee staff to her current gig as chief legal officer for Fifth Third Bancorp.
None of these revolving door appointees are especially surprising; in Republican and Democratic administrations alike, what is truly surprising is when someone who is NOT an industry lobbyist or insider is appointed to regulate banks. Notably missing from this administration's appointees are members of the other common category - the academic economist.