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Biden Names 'Progressive Hero' To Top Financial Regulatory Post

Biden Names 'Progressive Hero' To Top Financial Regulatory Post

By Andrea Shalal

WASHINGTON (Reuters) -U.S. President Joe Biden on Friday said he would nominate former Treasury official Michael Barr to be the Federal Reserve's top regulatory official, replacing Sarah Bloom Raskin who withdrew in March after failing to win the backing of moderate Democrats.

Barr, currently a professor at the University of Michigan Law School, was a central figure at the Treasury under President Barack Obama when Congress passed the 2010 Dodd-Frank financial reform law in the wake of the 2007-09 financial crisis, and helped create the Consumer Financial Protection Bureau (CFPB).

"Michael brings the expertise and experience necessary for this important position at a critical time for our economy and families across the country," Biden said in a statement.

The Fed vice chair for supervision is responsible for overseeing the biggest banks, determining proper capital ratios, and represents the United States in cross-border negotiations over international banking standards.

As Treasury assistant secretary for financial institutions, Barr helped shape the Wall Street post-crisis overhaul, Biden said, adding that Barr had strong support across the political spectrum. He noted that Barr had been confirmed on a bipartisan basis for the Treasury post in 2009.

However, Patrick Toomey, the top Republican on the Senate Banking Committee, criticized Barr's support of the Dodd Frank law, which Toomey said enshrined taxpayer bank bailouts. He also said the CFPB was "unaccountable" and "unconstitutional."

"For these and other reasons, I have concerns about his nomination, but I look forward to meeting and discussing these and other matters," Toomey said in a Friday statement.

The president said he would work closely with the Senate Banking Committee to move Barr's nomination forward quickly, and called on the Senate - which is evenly split with Democrats holding the tie-breaker vote - to swiftly confirm his four other Fed nominees, including Jerome Powell for a second term as chair and Fed Governor Lael Brainard for vice chair.

A vote is expected on Powell, Brainard and economists Philip Jefferson and Lisa Cook, both nominated to fill vacant Fed board seats, after the Senate returns from the Easter break.

'This Job Is Vital'

Senate Banking Committee Chair Sherrod Brown said he would support Barr's nomination and strongly urged his Republican colleagues to avoid personal attacks and back him as well.

"At a time when working families are dealing with rising prices while corporate profits continue to soar, this job is vital to ensuring the economy works for everyone," Brown said.

If confirmed Barr, who would have a vote on monetary policy issues, would arrive at the Fed as it is confronting the highest inflation in 40 years, with officials promising an aggressive series of rate hikes this year to rein in prices. The central bank is also planning to cull its $9 trillion balance sheet.

Barr will also have a lengthy to-do list on the regulatory front, including pushing ahead with climate risk tests for Wall Street banks, implementing new capital rules, and drafting new rules for cryptocurrencies and community lending.

Barr's name had been floated for another bank regulatory post, heading up the Office of the Comptroller of the Currency, but some progressives objected, citing his work with some fintech firms after leaving government.

Biden said Barr had spent his career protecting consumers, and played a critical role in creating both the CFPB and the Fed post for which he was now being nominated. He also served at the National Economic Council in the White House.

Former CFPB Director Richard Cordray has described Barr as "a progressive champion," while Senator Elizabeth Warren has called him "a hero" for his work on Dodd-Frank.

"He was instrumental in the passage of Dodd-Frank, to ensure a future financial crisis would not create devastating economic hardship for working families," Biden said.

Raskin withdrew from consideration for the top regulatory post at the Fed on March 15, a day after Democratic Senator Joe Manchin and moderate Republicans said they would not back her, leaving no path to confirmation by the full Senate.

(Reporting by Andrea Shalal; additional reporting by Michelle Price; Editing by Leslie Adler and Franklin Paul)

Ex-Goldman Banker Mnuchin Installed As Treasury Secretary

Ex-Goldman Banker Mnuchin Installed As Treasury Secretary

WASHINGTON (Reuters) – President Donald Trump swore in former Goldman Sachs banker and Hollywood financier, Steven Mnuchin, as Treasury secretary on Monday, putting him to work on tax reform, financial de-regulation, and economic diplomacy efforts.

The U.S. Senate voted to confirm Mnuchin 53-47, with all but one Democrat opposing him over his handling of thousands of foreclosures as head of OneWest Bank after the 2007-2009 housing collapse.

At a White House swearing-in ceremony, Trump said Mnuchin would be a “great champion” for U.S. citizens.

“He will fight for middle-class tax reductions, financial reforms that open up lending and create millions of new jobs, and fiercely defend the American tax dollar and your financial security,” Trump said. “And he will also defend our manufacturing jobs from those who cheat and steal and rob us blind.”

Lawmakers, lobbyists, and business groups have been nervously waiting for Mnuchin to take office and fill in the many blanks on how he will pursue tax reform and handle delicate economic cooperation efforts with China, Mexico, and other trading partners worried that Trump’s “America First” strategy will upend decades-old trade rules and currency practices.

Mnuchin, 54, provided no details of his plans as he was sworn in.

“I am committed to using the full powers of this office to create more jobs, to combat terrorist activities and financing, and to make America great again,” Mnuchin said.

Trump has pledged to roll back the stricter financial regulation under the Dodd-Frank reform law enacted after the financial crisis, pursue tougher trade policies on China and Mexico to reduce U.S. trade deficits, and reduce business tax rates.

CHALLENGES COMING UP FAST

Mnuchin faces immediate challenges with the March 15 expiration of a U.S. debt ceiling suspension, ushering in the threat of a new default showdown, and a March 17 meeting of finance ministers from the Group of 20 major economies, where he will face tough questions about Trump’s plans to increase trade protections.

In April, Mnuchin will have to determine whether to declare China a currency manipulator as part of Treasury’s semi-annual currency report.

“There is a real open question as to whether this administration is going to cut itself off from international monetary cooperation, whether it’s exchange rate policies or attitudes towards multilateral institutions or international regulatory policy,” said Edwin Truman, a former Treasury and Federal Reserve official now with the Peterson Institute for International Economics

Among Mnuchin’s biggest jobs is managing a sprawling congressional tax reform effort that seeks to slash business tax rates and enact a new border tax adjustment system aimed at boosting U.S. exports.

Mnuchin will quickly need to build a core management team to handle such challenges.

Treasury and White House representatives did not respond to requests for comment on Monday on reports that Trump would soon nominate David Malpass, a former economist at failed Wall Street bank Bear Stearns, as Treasury undersecretary for international affairs, the agency’s top economic diplomacy job.

Malpass, a Trump campaign adviser who had been leading Treasury transition efforts, was seen as a leading candidate for the job, with experience from international economic posts in the Ronald Reagan and George H.W. Bush administrations.

Other names that have been floated for senior posts include Goldman Sachs banker Jim Donovan for deputy Treasury secretary and Justin Muzinich, a former Morgan Stanley banker, for undersecretary of domestic finance.

“FORECLOSURE MACHINE”

Mnuchin, a second-generation Goldman Sachs banker who led the firm’s mortgage bond trading but left the bank in 2002, came under fire from Democrats over his investor group’s 2009 acquisition of another failed lender, IndyMac Bank, from the Federal Deposit Insurance Corp.

The bank, rebranded as OneWest, subsequently foreclosed on more than 36,000 homeowners, drawing charges from housing advocates that it was a “foreclosure machine.”

Mnuchin grew OneWest into Southern California’s largest lender and sold it for $3.4 billion in 2015. He has also helped finance Hollywood blockbusters such as “Avatar,” “American Sniper” and this past weekend’s box office champion, “The Lego Batman Movie,” which took in $55.6 million.

The Senate on Monday also unanimously confirmed David Shulkin as secretary of veterans affairs, putting the only holdover from the Obama administration in charge of the second largest federal agency. Shulkin had been in charge of the VA’s sprawling health system for the past 18 months.

(Additional reporting by Emily Stephenson; Editing by Peter Cooney and Leslie Adler)

IMAGE: U.S. President Donald Trump (L) watches as Vice President Mike Pence (R) swears in Steve Mnuchin as Treasury Secretary next to his fiancée Louise Linton in the Oval Office of the White House in Washington February 13, 2017. REUTERS/Yuri Gripas

Senators Question Goldman Sachs On Its Role In Trump Banking Policy

Senators Question Goldman Sachs On Its Role In Trump Banking Policy

(Reuters) – Two U.S. senators are seeking details from Goldman Sachs Group Inc’s chief executive on the extent to which the bank’s employees were involved in drafting of the recent executive orders on banking and fiduciary regulations.

In a letter to CEO Lloyd Blankfein dated Feb. 9 and made public on Friday, Democratic Senators Elizabeth Warren and Tammy Baldwin asked for details on “lobbying” activities in the bank related to review of the Dodd-Frank Act and the Obama-era fiduciary rule on financial advice.

Blankfein was also asked to detail the profits Goldman would make if these reforms came into effect.

“We’ve had no involvement in the drafting of any executive orders,” a Goldman spokesman said on Friday.

In December, Trump appointed Gary Cohn, former Goldman president and chief operating officer, to head the White House National Economic Council, a group that coordinates economic policy across agencies.

Trump last week ordered reviews of major banking rules that were put in place after the 2008 financial crisis, drawing fire from Democrats who said his order lacked substance and squarely aligned him with Wall Street bankers.

“The executive orders released by President Trump on Friday last week raise our concerns about the degree to which Cohn’s advice to Trump is good for Wall Street, but bad for Americans,” the senators wrote on Thursday.

“Goldman Sachs would be a major beneficiary of these efforts to deregulate the financial industry,” they added in the letter.

Trump also named former Goldman partner Steven Mnuchin as his pick for Treasury secretary in December.

The senators have asked for any communication between the bank’s employees and Cohn, Mnuchin, nominee for the SEC chair Jay Clayton, and chief strategist Steve Bannon.

(Editing by Sandra Maler)

IMAGE: A sign is displayed in the reception of Goldman Sachs in Sydney, Australia, May 18, 2016. REUTERS/David Gray

Republicans Take First Steps To Kill Five Obama-Era Regulations

Republicans Take First Steps To Kill Five Obama-Era Regulations

WASHINGTON (Reuters) – House Republicans on Monday began the process of killing five Obama-era rules on corruption, the environment, labor, and guns under the first real test of the Congressional Review Act, a law intended to keep regulation in check.

Republicans put as much urgency on limiting what they consider over-regulation that stifles economic growth as they do on overhauling the tax code and dismantling the Affordable Care Act, according to House Majority Leader Kevin McCarthy.

This is the first time the Republican-led House of Representatives has targeted specific rules since convening on Jan. 3. Earlier this month it passed bills to limit regulatory agencies and Republican President Donald Trump is cutting regulation through executive orders.

Under the law, Congress can use simple majority votes to stop recent regulations in their tracks. Timing in the law means any rules enacted after May 31 are eligible for axing.

The law has been used effectively only once, ending a rule on ergonomics in 2001. Both sides consider this week a test of its powers.

The House Rules Committee was expected on Monday evening to send to the full chamber a measure axing three regulations enacted under former President Barack Obama, a Democrat. They were the Stream Protection Rule, the Securities and Exchange Commission’s “resource extraction rule,” and the Social Security Administration’s expanded background checks on disabled gun buyers.

On Tuesday it will send another measure overturning rules on methane and federal contractors. The full body is expected to pass both measures on Wednesday and then hand them off to the Senate.

Senate Majority Leader Mitch McConnell on Monday introduced a companion measure on the stream rule so the Senate can act quickly once the House votes.

Senator James Inhofe, chair of the Environment committee, meanwhile, said he was introducing one on the extraction resources and warned that there were other resolutions to come.

The Interior Department took years to craft the stream rule, hoping to prevent coal-mining waste from contaminating water sources in areas near mountain-top removal mining sites. Critics say it is unnecessary and goes too far, wiping out jobs, and usurping state rights.

The extraction rule took years to complete. It was required in the 2010 Dodd-Frank Wall Street reform law, but only approved this summer. It requires companies such as Exxon Mobil Corp to state publicly how much they pay governments in taxes and other fees. Opponents say it hurts U.S. energy companies, while human rights groups argue it reduces corruption.

Liberal groups are outraged by the rollbacks, but their traditional allies, Democratic lawmakers, have limited means to stop them in the Republican-dominated Congress.

House Democrats will host events with experts, and activists will try to rally the public, hoping to persuade Republicans to vote no. Senate Democrats cannot filibuster the measures but congressional aides expect them to slow the process by taking the full five hours they are allowed to speak against each measure on the chamber’s floor.

(Reporting by Lisa Lambert; additional reporting by Sarah N. Lynch; Editing by Cynthia Osterman and Grant McCool)

IMAGE: U.S. President Donald Trump (R), flanked by U.S. Representative Steve Scalise (R-LA) (from L), Representative Kevin McCarthy (R-CA), Senator John Cornyn (R-TX), and Senate Majority Leader Mitch McConnell (R-KY), receives a standing ovation as he speaks at a congressional Republican retreat in Philadelphia, U.S. January 26, 2017. REUTERS/Jonathan Ernst