WASHINGTON (Reuters) – Wall Street could face a four-year hiatus after President Joe Biden confirmed on Monday that he plans to appoint two consumer champions to lead the best financial agencies. This indicates a stricter attitude towards the industry than many people expected.
Gary Gensler will serve as chair of the Securities and Exchange Commission (SEC) and the Federal Trade Commission, Rohit Chopra, will head the Bureau of Financial Consumer Protection (CFPB). Progressive people see the agencies as critical to promoting policy priorities regarding climate change and social justice.
Wall Street-friendly Republicans criticized Biden on Monday for bending to the left, warning that the choice would be divisive.
“The Biden team is working with members of the far-left,” Patrick McHenry, head of the Republican in the House of Representatives’ Financial Panel, said of Chopra, while Gensler should be warned: “to resist the pressure. To set up our system of securities disclosure to try to address non-economic issues or social problems. ”
Gensler, chairman of the derivatives regulator from 2009 to 2014, implemented new swap trading rules created by Congress after the financial crisis, and developed a reputation as a tough operator willing to pursue powerful Wall Street interests resist.
Chopra helped draft the CFPB after the crisis and was its first ombudsman for student loans. At the FTC, he advocated for stricter rules for large technology companies over consumer privacy and competition, and for stricter enforcement penalties.
DEMOCRACIES IN CONTROL
While Republicans appear to have a good chance of retaining control of the Senate after the Nov. 3 election, financial executives hoped Biden would pursue more moderate choices. But Democratic victories in two elections in Georgia earlier this month mean Democrats will have effective control of the chamber once Biden and Vice President-elect Kamala Harris are sworn in on Wednesday.
These victories also mean that Sherrod Brown, the anti-Wall Street firefighter, will lead the powerful Senate Banking Committee. He said he intends to try to repeal Wall Street-friendly rules imposed by President Donald Trump’s regulators.
Brown saw Chopra on Monday as a ‘daring’ choice that would ensure the CFPB plays a leading role in combating racial inequalities in our financial system, while Gensler puts ‘bad actors accountable’ and ‘working families first’. ‘.
Gensler is expected to pursue new corporate disclosures on climate change-related risks, political spending, the composition and treatment of employees in the company, and to complete, among other things, rules for CEO compensation for the executive crisis.
Chopra is expected to review payday and debt collection rules, which, according to influential consumer groups, will not protect Americans. They also hope that he will eliminate excessive lending rates and abusive debt collection practices, address the student burden and the gaps in minorities’ access to credit.
“The CFPB has an incredibly important task to do, including stopping financial rip-offs,” said Lisa Donner, executive director of Americans for Financial Reform, a brainstorm. “It also plays an urgent role in helping families survive and recover from the pandemic economic crisis.”
However, Biden will first have to fire Kathy Kraninger, the current CFPB director, a power he will have thanks to a ruling by the Supreme Court last year, which said the CFPB director should serve according to the president’s will.
But Richard Hunt, CEO of the Consumer Bankers Association, rejected the idea that Biden should automatically use the power.
‘CBA does not believe that it is in the best interest of consumers to have a new director with every change in the administration. This whiplash effect will hamper innovation and prevent consistent regulations, ”Hunt said in a usually powerful statement.
Reported by Michelle Price; Edited by Paul Simao