WASHINGTON (Reuters) – Wall Street could face four years of discomfort after President-elect Joe Biden’s team confirmed on Monday it intends to nominate two consumer champions to lead top financial agencies, signaling a tougher stance on the industry than many had anticipated.
Gary Gensler will chair the Securities and Exchange Commission (SEC), and Rohit Chopra, a member of the Federal Trade Commission, will head the Office of Consumer Financial Protection (CFPB). Progressives see agencies as key to promoting political priorities on climate change and social justice.
Friendly Republicans on Wall Street criticized Biden on Monday for bowing to the left, warning that the election would be divisive.
“The Biden team is facing members of the far left,” said Patrick McHenry, a Republican leader in the House of Representatives’ financial panel, about Chopra, while warning that Gensler should “resist pressure to command our disclosure regime.” to try to remedy economic or social problems. “
As chairman of the derivatives regulator from 2009 to 2014, Gensler implemented new rules for trading swaps created by Congress after the financial crisis, developing a reputation as a tough trader willing to deal with strong Wall Street interests.
Chopra helped set up the CFPB after the crisis and served as the first student loan lawyer. At the FTC, he campaigned for tougher rules for large technology companies on consumer privacy and competition and for stricter enforcement sanctions.
DEMOCRATS IN CONTROL
Given that Republicans have a good chance of maintaining control of the Senate after the Nov. 3 election, CFOs hoped Biden would pursue more moderate elections. But Democratic victories in Georgia’s two elections earlier this month mean Democrats will have effective control of the chamber after Biden and Vice President-elect Kamala Harris take the oath on Wednesday.
These victories also mean the warm anti-Wall Street, Sherrod Brown, will lead the powerful Senate Banking Committee. He said he intends to try to repeal the friendly rules on Wall Street 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 inequities in our financial system,” while Gensler “will hold accountable the bad actors.” and will put “working families first.”
Gensler is expected to pursue new corporate disclosures on the risks related to climate change, political spending, the composition and treatment of the company’s workforce and complete the post-crisis executive clearing boards, among other rules.
Chopra is expected to review payday loan and debt collection rules, which influential consumer groups say will not protect Americans. They also hope that it will eliminate exorbitant loan rates and abusive debt collection practices, address the burden of student debt and gaps in minority access to credit.
“The CFPB has an incredibly important job to do, including stopping financial fraud,” said Lisa Donner, executive director of Americans for Financial Reform, a think tank. “It also has an urgent role to play in helping families survive and recover from the pandemic-induced economic crisis.”
However, Biden will first have to fire Kathy Kraninger, the current director of the CFPB, a power he will have due to a Supreme Court ruling last year that said the CFPB director worked at the request of the president.
But Richard Hunt, executive director of the Consumer Bankers Association, rejected the idea that Biden should automatically use that power.
“CBA does not believe that it is in the interest of consumers to have a new director with each change in administration. This saw effect will stifle innovation and prevent consistent regulation, ”Hunt said in a usually strong statement.
Reporting by Michelle Price; Mountain by Paul Simao