WASHINGTON (Reuters) – Wall Street could be facing an uncomfortable four years after President-elect Joe Biden’s team confirmed on Monday that it planned to nominate two consumer champions to lead major financial agencies, indicating a more hard on the industry than many had anticipated.
Gary Gensler will chair the Securities and Exchange Commission (SEC) and Federal Trade Commission member Rohit Chopra will head the Office of Consumer Financial Protection (CFPB). Progressives see agencies as key to advancing political priorities on climate change and social justice.
Wall Street-friendly Republicans on Monday criticized Biden for bowing to leftists, warning the options would be divisive.
“The Biden team is looking for members of the far left,” said Patrick McHenry, a Republican leader in the House finance group on Chopra, while warning that Gensler should “resist pressure to demand our securities disclosure regime to try to solve economic issues or social problems “.
Chairman of the derivatives regulator from 2009 to 2014, Gensler implemented new swap trading rules created by Congress after the financial crisis, developing a reputation as a tough trader willing to resist Wall Street’s powerful interests.
Chopra helped establish the CFPB after the crisis and was its first student loan advocate. 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
With Republicans looking to have a good chance of maintaining control of the Senate after the Nov. 3 election, financial executives expected Biden to pursue more moderate options. But Democratic victories in two Georgia elections earlier this month mean Democrats will have effective control of the chamber once Biden and Vice President-elect Kamala Harris swear on Wednesday.
These victories also mean Sherrod Brown, leader against Wall Street, will lead the powerful Senate Banking Committee. He has said he plans to try to repeal Wall Street’s friendly rules introduced by President Donald Trump’s regulators.
On Monday, Brown hailed Chopra as a “bold” option that would ensure that the CFPB “plays a leading role in fighting racial inequalities in our financial system,” while Gensler “would hold bad actors accountable” and put “the working families in the first place “.
Gensler is expected to pursue new corporate disclosures on risks related to climate change, policy spending and the composition and treatment of the workforce of companies, and complete post-crisis executive compensation restrictions, among other rules.
Chopra is expected to revise debt collection rules and payday loans, which according to influential consumer groups will not protect Americans. They also hope it will eliminate exorbitant loan rates and abusive debt collection practices, address the burden of student debt and the gaps in minority credit access.
“The CFPB has an incredibly important task to do, including stopping financial scams,” 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.”
Biden, however, will first have to fire Kathy Kraninger, the current director of the CFPB, a power she will have thanks to a Supreme Court ruling last year that said the CFPB director served at the will of the president.
But Richard Hunt, executive director of the Consumer Bankers Association, rejected the idea that Biden would automatically use that power.
“CBA does not believe it is in the best interest of consumers to have a new director with each change of administration. This whip saw effect will stifle innovation and avoid consistent regulations,” Hunt said in a generally forceful statement.
Michelle Price Reports; Edited by Paul Simao