WASHINGTON (Reuters) – Wall Street may be facing an uncomfortable four years after President-elect Joe Biden’s team confirmed on Monday that it planned to nominate two consumer champions to lead major financial institutions, hinting at a tougher stance on industry than many expected.
Gary Gensler will be chair of the Securities and Exchange Commission (SEC) and Rohit Chopra, a member of the Federal Trade Commission, will head the Consumer Financial Protection Bureau (CFPB). Progressives see the agencies as crucial for advancing policy priorities in the areas of climate change and social justice.
Wall Street-friendly Republicans on Monday criticized Biden for bowing to leftists, warning that the choices would be divided.
“The Biden team joins members of the far left,” Patrick McHenry, the Republican leader on the House of Representatives’ financial panel, said of Chopra, while warning Gensler to “resist the pressure to us. regime for the disclosure of economic or social problems. “
Gensler, chair of the derivatives regulator from 2009 to 2014, implemented new rules for trading swaps set by Congress after the financial crisis and developed a reputation as a tough operator willing to stand up for mighty Wall Street interests.
Chopra helped set up the CFPB after the crisis and was the first student loan ombudsman. At the FTC, he campaigned for tougher consumer privacy and competition technology companies’ rules and enforcement fines.
DEMOCRATS UNDER CONTROL
With Republicans appearing to have a good chance of retaining control of the Senate after the Nov. 3 election, finance managers hoped Biden would pursue more moderate choices. But Democratic victories in two second elections in Georgia earlier this month mean Democrats will have effective control of the chamber once Biden and Vice President Kamala Harris are sworn in on Wednesday.
Those victories also mean that Sherrod Brown, a firefighter against Wall Street, will lead the powerful Senate Banking Committee. He has said he plans to try to repeal Wall Street-friendly rules put in place by President Donald Trump’s regulators.
On Monday, Brown hailed Chopra as a ‘bold’ choice that would ensure the CFPB ‘take a leading role in the fight against racial inequalities in our financial system’ while Gensler would ‘hold bad actors to account’ and ‘put working families first. set ‘.
Gensler is expected to pursue new corporate publications on risks associated with climate change, political spending and the composition and treatment of the company’s workforce, including finalizing post-crisis pay restrictions.
Chopra is expected to review payday loan and debt collection rules, which influential consumer groups say won’t protect Americans. They also hope that he will eradicate exorbitant borrowing rates and abuse of debt collection practices, address student debt and gaps in minorities’ access to credit.
“The CFPB has an incredibly important role to play, including stopping financial rip-offs,” said Lisa Donner, executive director at Americans for Financial Reform, a think tank. “It also plays an urgent role in helping families survive and recover from the pandemic-induced economic crisis.”
However, Biden will first have to fire Kathy Kraninger, the current CFPB director, a power he will have thanks to a Supreme Court ruling last year stating that the CFPB director was serving at his will.
But Richard Hunt, chief executive of the Consumer Bankers Association, rejected the idea that Biden should automatically use that power.
“CBA does not believe it is in the consumer’s interest to have a new director with every change in administration. This whip sawing effect will stifle innovation and prevent consistent regulation, ”said Hunt in a generally strong statement.
Reporting by Michelle Price; Editing by Paul Simao