Gary Gensler in 2013.
Photographer: Andrew Harrer / Bloomberg
Photographer: Andrew Harrer / Bloomberg
President-elect Joe Biden chose two veteran regulators strongly supported by progressive Democrats to lead two top Wall Street watchers, signaling that his government is planning strict supervision after four years of light politics under President Donald Trump.
Former Commodity Futures Trading Commission Chairman Gary Gensler will be appointed to lead the Securities and Exchange Commission Rohit Chopra, a member of the Federal Trade Commission, is being hired to lead the Consumer Financial Protection Bureau, according to people familiar with the decision.
The choices follow weeks of intra-party disputes over financial regulation positions between moderate Democrats and those in the left wing of the party who want to see a sharp departure from business-friendly policies promoted during the Trump administration. This is bad news for the banking sector, which has been preparing for the prospect of stricter rules since Biden was elected in November.
Gensler, 63, is ex- Goldman Sachs Group Inc. partner who earned a reputation as a scourge of Wall Street when he engaged in violent battles while advancing derivatives regulation at the CFTC during the Obama administration. Chopra, 38, is an acolyte of Senator Elizabeth Warren from Massachusetts, who helped her found the CFPB before she ran.
Both nominees will be subject to Senate confirmation, and the SEC and CFPB are likely to be under provisional leaders until the process is completed.
Gensler and Chopra’s chances of winning confirmation were helped significantly by the Democrats’ victory in two Senate run-off elections in Georgia this month, resulting in a 50-50 split. The new vice president, Kamala Harris, will have the casting vote if all Republicans oppose Biden’s financial inspectors. This could nullify any efforts by the powerful banking lobby to block Gensler and Chopra, whose nominations would go to the Senate Banking Committee.
Photographer: Alex Edelman / Bloomberg
If confirmed, Gensler would take charge of an agency that, according to some Democrats, has become very close to the banking sector. He would need to deal immediately with market disruptions resulting from the coronavirus pandemic and the escalating US rivalry with China over audits of public companies.
Democrats expect Gensler to push for tougher enforcement and greater fines for financial companies and executives accused of wrongdoing. He will also face pressure to pressure companies to disclose political spending, the risks of climate change and diversity and inclusion.
Progressives hope that Chopra will reinvigorate a CFPB that they say has become a toothless version of the agency he helped Warren create. In his first stint at the agency, he served as a student loan ombudsman. This experience can be useful if he wants to keep Biden’s promise to crack down on private creditors who cheat on borrowing students.
The Progressive Change Campaign Committee aligned by Warren said Chopra’s choice was “a great victory for consumers and a sign that executive power will be used to achieve tangible results for the American people.”
– With the help of Robert Schmidt
(Updates with chances of Senate confirmation from the sixth paragraph)