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Illustration by Ford Williams

COMMERCIAL FINANCE 701 — The new federal banking sheriffs


On May 24, 2018, 489 days after his inauguration, President Donald Trump finally succeeded in placing appointees at the helms of the four major federal banking regulators.  The prospective immediate and longer term changes to be brought about by these new federal banking sheriffs bode well for banks, commercial lenders, and developers.

BACK DROP: Barack, Elizabeth & Donald

During the Obama Years (2009-2017), the regulatory landscape hardened. The passage of the corpulent Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) served as a blueprint to expand oversight. Codified regulations burgeoned and a new agency – the Consumer Finance Protection Bureau (CFPB) – joined the anti-lender frenzy sparked by the Great Recession (2007-2012).

In 2010, Obama named liberal law professor Elizabeth Warren as an Assistant to the President and Special Advisor to the Secretary of the Treasury to set up the newly formed CFPB.  Passed over for the lead role at the new agency, Warren chose to seek political office. In January 2013, she became a U.S. Senator (D-Mass) and immediately joined the U.S. Senate Banking Committee in the then-Democratically controlled Senate.

Trump’s campaign platform included promises of a DFA rollback, a withdrawal of regulations, and replaced agency heads.


The acronyms of the major federal banking regulators read like a long string of expensive typos: FRB, OCC, FDIC and CFPB. Each of these overlapping Big Four watchdogs comes with its own presidentially-appointed head, tax or fee-based budget, thousands of employees, myriad regulations, and a snazzy logo. A hodgepodge of lesser known federal agencies augments the stifling bureaucracy.


The Federal Reserve Board (FRB).  On February 5, 2018, FRB governor Jerome Powell succeeded Obama-appointee Janet Yellen (2014-2018) as the Chair of the FRB Board of Governors. The FRB, an independent agency, plays a major role in supervising bank holding companies and controlling interest rates. At Powell’s hearing before the U.S. Senate Banking Committee, Warren cast the lone vote opposing his confirmation. The full Senate approved the nomination on a 84-13 vote.  The Chair, paid $210,700 per year, oversees approximately 3,000 employees and a $779 million budget (excluding Federal Reserve Banks and currency operations).

Office of the Comptroller of the Currency (OCC). On November 27, 2017, long-time banking executive Joseph Otting took over as Comptroller of the Currency, filling the seat formerly held by Obama-appointee Thomas Curry (2012-2017).  The OCC, an independent bureau in the U.S. Treasury Department, supervises national banks. At Otting’s hearing before the U.S. Senate Banking committee, the Senators voted along party lines, 13-10, which advanced the nomination to the full Senate where it was approved 54-43.  The Comptroller, paid $174,500 per year, oversees approximately 4,000 employees and a $1.15 billion budget.

Federal Deposit Insurance Corporation (FDIC). On May 24, 2018, Yugoslavia-immigrant and former Fifth Third Bank chief legal officer Jelena McWilliams was approved by the U.S. Senate as Chair of the FDIC.  In addition to providing deposit insurance, the FDIC examines banks for safety and soundness. At McWilliams’ hearing before the U.S. Senate Banking Committee, Warren cast the lone vote opposing her confirmation. The full Senate approved the nomination on a 69-24 vote.  The Chair, paid $174,500 per year, oversees approximately 8,700 employees and a $2.2 billion budget.


Consumer Finance Protection Bureau (CFPB). On November 25, 2017, former Congressman Mick Mulvaney (R-S.C.) became Acting Director of the CFPB, succeeding Obama-appointee Richard Cordray who resigned to run for governor of Ohio. The CFPB, an independent bureau housed in the FRB, examines banks over $10 billion in assets. The Director, paid $189,600 per year, oversees approximately 1,600 employees and a $600 million budget.

Mulvaney, dually serving as Trump’s Director of the Office of Management and Budget, took custody of the Warren-brainchild-agency despite a DFA succession plan designed to insure the Obama-appointed Director could appoint his own successor.  Warren has twice tweeted her characterization of Mulvaney as a “middle finger” to consumers. The Presidential appointment is mired in a controversy with constitutional implications.  A federal district judge (appointed by Trump and confirmed in 2017) has twice ruled in favor of Trump’s authority to fill the vacancy. The lower court ruling has been appealed and a federal appellate court heard arguments on April 12.

Mulvaney’s temporary appointment is tentatively set to expire on June 22, but could be extended if the President submits a nomination (other than Mulvaney) to the U.S. Senate for consideration.


Trump appointees also head banking-related federal departments and agencies including Treasury, HUD, IRS, SEC, CFTC, SBA, FCA, and EPA.    On January 6, 2019, Trump will have an opportunity to replace the Obama-appointed director of FHFA, an agency that regulates Fannie Mae, Freddie Mac, and the FHLBs.


Regardless of your political leanings, Mulvaney summed up the situation well at a November 27, 2017 press conference: “Anybody who thinks that a Trump administration CFPB would be the same as an Obama administration CFPB is simply being naive. Elections have consequences at every agency . . . .”

Sixteen months after taking office, Trump finally has his new sheriffs supervising the banking industry.

» Molly Jeffcoat Moody and Ben Williams are attorneys at Watkins & Eager PLLC, and are both recognized by Chambers USA and Best Lawyers in America. Molly and Ben were selected as Best Lawyer’s 2018 Lawyer of the Year (Jackson, Mississippi) in, respectively, Commercial Transactions /UCC Law and Project Finance Law. Additional information is available at www.watkinseager.com. Ford Williams, the artist, is a rising junior at the Savannah College of Art & Design in Georgia.


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One comment

  1. No supervision necessary. The banks are free to do whatever they like. No more consumer protection. The appointees are taking salaries paid by taxpayers and are instructed to do nothing. Liberty Hall, vacation time. Enjoy the next crash, republicans.

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