In the banking world, 2016 was in many ways the year of the regulator. The industry was dominated by talk of potential Dodd-Frank rollbacks, speculation about interest rates, debate over capital requirements, and regulatory sanctions that resulted in a CEO departure at one of the nation's biggest banks.
While many individuals left their mark on banking in 2016, S&P Global Market Intelligence selected a handful who stood out from the crowd.
President-elect Donald Trump
Following an election upset and populist movement of Brexit proportions, the real estate mogul and political newcomer will be formally sworn in as the 45th President of the United States on Jan. 20. Despite predictions that markets would crash should Trump win, bank stocks wasted no time rallying after his election.
Trump's generally pro-business platform has some analysts and bankers hopeful his time in office will usher in an age of lighter regulations, especially for smaller institutions. Before his election, Trump vowed he would pursue a requirement that for every new federal regulation, two federal regulations would be squashed. He has pledged that his financial services policy implementation team will "dismantle" the Dodd-Frank Act. And under a Trump presidency, legislation like the Financial CHOICE Act, which calls for numerous changes to Dodd-Frank, could have a chance to blossom.
Federal Reserve Board Chair Janet Yellen
Yellen is arguably the most influential person in the financial world, with investors hanging onto her every word.
For just the second time since the 2008 financial crisis, the Federal Open Market Committee voted in December 2016 to lift the U.S. central bank's key interest rate, a step toward gradual monetary policy normalization following a years-long near-zero rate environment. Though the rate hike was widely expected, projections that 2017 could see up to three rate hikes came as a surprise to some market observers.
At a press conference following the vote, Yellen lauded "considerable progress" toward the Fed's unemployment and inflation goals.
Yellen served as vice chair of the Fed board for four years before she was appointed chair in 2014. She has been continually criticized by Trump, but said she is determined to complete her term as chair, which ends in January 2018. Her term as a member of the board of governors expires in January 2024.
"I haven't made any decisions about the future," Yellen said. "I recognize I might or might not be re-appointed."
Former Wells Fargo Chairman and CEO John Stumpf
When industry giant Wells Fargo & Co. came under fire in September for cross-selling tactics that led to the unauthorized opening of as many as 2 million accounts, Stumpf wasn't able to avoid the heat for long. The embattled executive stepped down in October.
Although he is no longer leading one of the largest banks in the U.S., fallout from the scandal that developed during Stumpf's time at the helm is having broad impacts on the industry. As Rafferty Capital's Dick Bove put it, "Wells may have hurt every bank in the United States by what it has done. It may have put more fire in the bellies of those who want to more strictly regulate the industry."
Independent Community Bankers of America CEO Camden Fine seemed to agree, saying that the scandal "contributes to the growth of excessive regulation that needlessly burdens the local community banks that do right by their customers … while Wells Fargo has the luxury of throwing money at the problem to make it go away."
Comptroller of the Currency Thomas Curry
Curry continues to be a proponent of tougher banking regulations, stating that the industry has benefited from more robust oversight since the financial crisis. That position may be tough to maintain once Trump takes office and as Republicans call for a moratorium on new regulations until they revisit Dodd-Frank. Still, Curry said that the OCC will continue to move forward with new rule-making efforts "until Congress tells us not to."
"We must never settle for 'light-touch' supervision," Curry said at a November conference. "If we do, the OCC and the industry will suffer."
Curry said that despite the agency's heightened standards for the largest banks it supervises, more work needs to be done in addressing risk culture and risk management in the industry — pointing to the Wells Fargo scandal as proof.
He is also making his mark on the financial technology world by insisting that the OCC's incoming fintech charter "levels the playing field" by applying the same regulations imposed on banks to any fintech companies that elect to become national banks.
"Fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters," Curry said on Dec. 2. "Fintechs, while not without some risks, also can potentially deliver these products and services in a safer and more efficient manner."
Curry's term will expire in April 2017.
Federal Reserve Board Governor Daniel Tarullo
Tarullo is the current chair of the Federal Financial Institutions Examination Council. Like Curry, he has warned against weakening supervision at the nation's largest banks, and has defended financial reform led by the central bank.
He has earned notoriety for backing higher surcharges for global systemically important banks to ensure a larger safety net for institutions in the event of distress or failure. He has led the way on much of the Dodd-Frank rulemaking, and has been a vocal critic of the Financial CHOICE Act. He has also backed raising the threshold at which banks are subject to systemic regulations to $100 billion in assets from the current $50 billion level.
He played a key role in creating the total loss-absorbing capacity rule, or TLAC, which passed in late 2015 and is intended to ensure an institution's ability to absorb losses and recapitalize while improving market discipline. At its final meeting of the year, the Fed board finalized the rule regarding long-term debt holdings and TLAC at the largest banks.
Tarullo's term expires in January 2022.