Dems grill Trump bank regulator nominees
Two of President Trump’s financial regulatory nominees faced tough questions from Democrats over their Wall Street work at a hearing Thursday before the Senate Banking Committee.
Joseph Otting, Trump’s nominee for Comptroller of the Currency, and Randal Quarles, who has been nominated to serve on the Federal Reserve Board as vice chairman of supervision, would play major roles in fulfilling Trump’s promise to “dismantle” Dodd-Frank Act banking regulations.
While they are likely to be approved by the Republican-led committee, Democrats grilled the two.
Sen. Sherrod Brown (D-Ohio) said bank executives like Quarles and Otting took advantage of “an opportunity to profit by flipping failing banks bought at rock-bottom prices and foreclosing on working families — all while raking in taxpayer dollars.”
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“My concern isn’t whether today’s nominees have a great deal of experience working for banks,” Brown said. “My concern is whether they will work for American taxpayers and working families.”
Otting was the president and CEO of OneWest Bank, where he worked with Treasury Secretary Steven Mnuchin, and a vice chairman at U.S. Bancorp before that. He presided over hundreds of thousands of foreclosures at OneWest bank, which has been investigated for multiple federal and state housing violations.
Quarles served various senior positions in the Treasury Department between 2002 and 2006 before joining a private investment firm.
He was an undersecretary of domestic finance at the Treasury Department during the lead-up to the financial crisis and later joined a private investment firm that received bailout money after it purchased a failed bank.
Otting defended his career, saying his experiences “touched virtually every segment of the industry” including work at banks of all sizes. He said his time OneWest was smeared by a “false narrative.”
As OneWest president, Otting signed a settlement with federal regulators who accused the bank of automatically signing foreclosure paper without reviewing them properly, called “robo-signing.” Otting claimed that OneWest didn’t robo-sign documents but that he had to sign the consent order to save the business and his employees.
“When we signed the consent order, we did not confirm or deny the findings,” Otting said.
“If you didn’t engage in the practice than you shouldn’t have signed a consent order,” responded Sen. Catherine Cortez Masto (D-Nev.), who was Nevada’s attorney general for eight years.
Senate Banking Committee Chairman Mike Crapo (R-Idaho) praised Otting and Quarles for their qualifications and asked the nominees about how they would change Obama-era financial regulations.
Crapo asked Quarles, who would oversee Fed financial regulatory actions, if he’d agreed with changes floated by former Fed Vice Chairman Daniel Tarullo before his April resignation. Tarullo called for clarifying the Volcker Rule, which is meant to curb risky trading practices, lowering the thresholds at which banks are subjected to stress tests, simplifying rules on how much cash community banks should have and scraping part of a test to determine how stable big banks are.
Quarles said he favored those changes, along with other efforts to streamline financial regulation and be more transparent.
He told senators he wants transparency “to be a theme of the Federal Reserve’s regulatory activities” and called for a “much simpler, clearer, less kaleidoscopic construction of the regulatory system that would make it easier to understand where risk is and where risk isn’t.”
The Fed and the financial sector have fought for years about the central bank’s secrecy over its stress test critera, used to determine if financial institutions can withstand another crisis.
The Fed has long insisted that revealing details about the stress test process, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, could allow banks to manipulate the results.
Even so, Federal Reserve Chairwoman Janet Yellen told lawmakers in a June letter that the Fed will provide more details on the process.
Thursday’s hearing revealed little about Otting and Quarles’s potential deregulatory plans.
A sweeping House bill to replace much of Dodd-Frank is unlikely to see action in the Senate, where lawmakers are mulling a bipartisan bill that would include many of the changes Quarles endorsed at the hearing.
The Treasury Department is also reviewing the entire federal financial regulatory regime and suggesting changes, a process mandated by executive orders Trump signed in April.
Otting and Quarles would be responsible for implementing many of those changes, which Democrats largely oppose.
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