Gary Gensler in 2013.
Photographer: Andrew Harrer / Bloomberg
Photographer: Andrew Harrer / Bloomberg
President-elect Joe Biden has chosen a pair of veteran regulators heavily backed by Progressive Democrats to lead two key Wall Street watchdogs, indicating his administration is planning tough oversight after four years of light policies under the appointment of President Donald Trump.
Former Commodity Futures Trading Commission Chairman Gary Gensler will be appointed to lead the Securities and Exchange Commission i Federal Trade Commission member Rohit Chopra is being approved to lead the Office of Consumer Financial Protection, according to people who know the decision.
The picks follow weeks of intra-party disputes over financial regulation seats between moderate Democrats and those on the left of the party who want to abruptly move on friendship policies during the Trump administration. This is bad news for the banking industry, which has been preparing for the prospect of tougher rules since Biden was elected in November.
Gensler, 63, is an ex Partner of Goldman Sachs Group Inc. who earned Wall Street’s reputation as a scourge when he engaged in contusive battles while advancing derivative regulation at the CFTC during the Obama administration. Chopra, 38, is an acolyte of Massachusetts Senator Elizabeth Warren who helped her establish the CFPB before running for office.
Both candidates will be subject to Senate confirmation and it is likely that the SEC and CFPB will be under interim leaders until this process is completed.
The chances of Gensler and Chopra winning confirmation were significantly helped by Democrats who won two Senate elections in Georgia this month, resulting in a 50-50 split. Incoming Vice President Kamala Harris will hold the tie-breaking vote in case all Republicans oppose Biden’s financial watchdogs. This could nullify the efforts of the powerful banking lobby to block Gensler and Chopra, whose candidacies would pass to the Senate Banking Committee.
Photographer: Alex Edelman / Bloomberg
If confirmed, Gensler would take over an agency that some Democrats say has become too welcoming to the banking industry. It should immediately address market disruptions stemming from the coronavirus pandemic and the escalation of the U.S. dispute with China over public company audits.
Democrats will expect Gensler to push for tougher enforcement and larger fines for companies and financial executives accused of misdemeanors. It will also face pressures to push companies to disclose policy spending, climate change risks and diversity and inclusion.
Progressives will look to Chopra to invigorate a CFPB that they say has become a toothless version of the agency that helped create Warren. In his first stint at the agency, he served as an advocate for student loan. This experience can be helpful if you want to fulfill Biden’s promise to crack down on private lenders who cheat student borrowers.
The progressive change campaign committee, aligned with Warren, said Chopra’s selection was “a great victory for consumers and a signal that the executive branch will be used to achieve tangible results for the American people.”
– With the assistance of Robert Schmidt
(Updates with possibilities for Senate confirmation from the sixth paragraph)