President-elect Joe Biden has chosen a pair of veteran regulators heavily backed by Progressive Democrats to lead two key Wall Street watchdogs, signaling his administration is planning rigorous oversight after four years of light politics under President Donald Trump’s appointment .
Former Commodity Futures Trading Commission Chairman Gary Gensler will be appointed to lead the Securities and Exchange Commission and Rohit Chopra, member of the Federal Trade Commission, is called upon to lead the Consumer Financial Protection Bureau, according to people familiar with the decision.
The selections follow weeks of intra-party wrangling over financial regulatory positions between moderate Democrats and those on the party’s left wing who want to see a radical change from pro-business policies advanced under the administration Trump. This is bad news for the banking industry, which has been bracing for the prospect of stricter rules since Biden’s election in November.
Gensler, 63, is a senior Partner of Goldman Sachs Group Inc. which gained a reputation as the bane of Wall Street when it engaged in deadly battles while advancing derivatives regulation at the CFTC under the Obama administration. Chopra, 38, is a sidekick of Massachusetts Senator Elizabeth Warren who helped her set up the CFPB before running for office.
Both candidates will be subject to Senate confirmation, and the SEC and CFPB will likely be run on an interim basis until this process is complete.
The odds of Gensler and Chopra winning confirmation were aided considerably by Democrats winning two Senate second-round elections in Georgia this month, which resulted in a 50-50 split. New vice president Kamala Harris will hold the deciding vote if all Republicans oppose Biden’s financial watchdogs. This could undo any effort by the powerful banking lobby to block Gensler and Chopra, whose nominations would go to the Senate Banking Committee.
If confirmed, Gensler would take over an agency that some Democrats say has become too familiar with the banking industry. It is expected to immediately address market disruptions resulting from the coronavirus pandemic and the United States’ growing feud with China over audits of state-owned companies.
Democrats will expect Gensler to push for tougher enforcement and higher fines for financial firms and executives accused of wrongdoing. It will also face pressure to push companies to disclose political spending, climate change risks, diversity and inclusion.
Progressives will look to Chopra to reinvigorate a CFPB they say has become a toothless version of the agency he helped create. During his first stint at the agency, he held the position of student loans ombudsman. This experiment could come in handy if he is to keep Biden’s promise to crack down on private lenders who mislead student borrowers.
The Warren-aligned Progressive Change Campaign Committee said Chopra’s selection was “a great victory for consumers and a sign that executive power will be used to deliver tangible results for the American people.”
– With the help of Robert Schmidt
(Updates with Senate Confirmation Chances starting at sixth paragraph)