WASHINGTON (Reuters) – Wall Street may face 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 agencies, signaling a tougher stance in the banking sector. that many had predicted.
Gary Gensler will serve as chairman of the Securities and Exchange Commission (SEC) and Federal Trade Commissioner Rohit Chopra will head the Consumer Financial Protection Bureau (CFPB). Progressives see agencies as essential to advancing political priorities on climate change and social justice.
On Monday, Republican friends on Wall Street criticized Biden for bowing to leftists, warning that the choices would cause division.
“Biden’s team is favoring members of the far left,” Patrick McHenry, Republican leader on the House of Representatives’ finance panel, said of Chopra, while warning Gensler should “resist pressure to command our securities disclosure regime to try fix economic or social issues. ”
President of the derivative regulator from 2009 to 2014, Gensler implemented new swap trading rules created by Congress after the financial crisis, developing a reputation as a tough trader willing to face powerful Wall Street interests.
Chopra helped establish the CFPB after the crisis and served as its first student loan ombudsman. At the FTC, he campaigned for tougher rules for big tech companies on consumer privacy and competition, and for stricter enforcement penalties.
DEMOCRATS IN CONTROL
With Republicans appearing to stand a good chance of retaining control of the Senate after the November 3 election, financial executives expected Biden to try more moderate choices. But Democratic victories in two runoff elections in Georgia earlier this month mean that Democrats will have effective control of the House once Biden and Vice President-elect Kamala Harris take office on Wednesday.
These victories also mean that anti-Wall Street arsonist Sherrod Brown will head the powerful Senate Banking Committee. He said he plans to try to repeal the friendly Wall Street rules introduced by President Donald Trump’s regulators.
On Monday, Brown hailed Chopra as a “bold” choice that would ensure that the CFPB “plays a leading role in combating racial inequalities in our financial system”, while Gensler “blames bad actors” and places “working families first of all”.
Gensler is expected to seek new corporate disclosures about risks related to climate change, political spending and the composition and treatment of the company’s workforce, and complete restrictions on post-crisis executive compensation, among other rules.
Chopra is expected to review the rules on payment and debt collection loans, which influential consumer groups say will not protect Americans. They also hope that it will eliminate exorbitant loan fees and abusive debt collection practices, address the student debt burden and the gaps in minority access to credit.
“The CFPB has an extremely important job to do, including preventing financial theft,” said Lisa Donner, executive director of American for Financial Reform, a study center. “It also has an urgent role to play in helping families survive and recover from the pandemic-induced economic crisis.”
Biden, however, will first have to fire Kathy Kraninger, the current director of the CFPB, a power he will have thanks to a Supreme Court decision last year that the CFPB director served at the president’s 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 that it is in the interests of consumers to have a new Director for each change in Management. This whip effect will stifle innovation and prevent consistent regulations, ”said Hunt in a generally blunt statement.
Michelle Price reporting; Editing by Paulo Simão