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Washington Wrap — Reports swirl about next CFPB director, Fed vice chair

The Washington Wrap is a weekly look at regulation, news and chatter from the Capitol. Send tips and ideas to brian.cheung@spglobal.com and polo.rocha@spglobal.com.

At the White House

National Credit Union Administration Chairman J. Mark McWatters is on the short list of candidates to head the Consumer Financial Protection Bureau, American Banker reported.

McWatters has led the NCUA board since June. In that time, he has pushed to dial back regulations on credit unions by proposing to reduce the CFPB's jurisdiction and by implementing a provision that allows large credit unions to conduct their own stress tests.

The CFPB itself has aimed to ease regulations in recent actions under interim Director Mick Mulvaney. Since Mulvaney took the reins in late November, the agency has begun reviewing outstanding investigations to ensure that the bureau is not overreaching; has temporarily frozen hiring and new rules; and has signaled that it is likely to postpone the implementation of new rules on prepaid cards. In its statement on the prepaid card rule implementation, the CFPB described itself as an "agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives."

But McWatters is one of only two members on the three-seat NCUA board, and the other, Rick Metsger, is serving past his term's expiration in August.


The White House continues to float possible nominees for the Federal Reserve's vice chairman position. On Dec. 27, the Wall Street Journal reported that President Donald Trump is considering former Treasury Department official Richard Clarida to replace former Fed vice chairman Stanley Fischer, who resigned in October.

Clarida is a managing director at the money management firm Pacific Investment Management Co. LLC and is a professor of economics at Columbia University. Clarida served in the George W. Bush administration as an assistant secretary for economic policy at the Treasury Department in 2002 and 2003.

Another former George W. Bush administration economist, Lawrence Lindsey, could be in the running as well. CNBC reported Dec. 21 that Lindsey, a former Fed governor and current CEO of The Lindsey Group economic advisory group, was interested in the position.

Trump has already nominated three individuals to the Fed board so far: Jerome Powell for chairman; Randal Quarles as vice chair of supervision; and Marvin Goodfriend as governor.

Other news

Although Trump appointees have already started moving to tailor regulations for smaller community financial institutions, some argue that the administration has not done enough to provide regulatory relief. On Dec. 27, the Conference of State Bank Supervisors, or CSBS, submitted a comment on the banking regulators' notice of proposed rulemaking concerning capital rule simplification, urging the government to provide community bank relief from provisions related to the Basel III global framework.

"In the past couple years, community banks have adjusted their systems to conform to the current methodology, and small changes will result in additional costs for these banks to tweak their core systems without any perceivable benefit," CSBS President and CEO John Ryan said.

The CSBS said it would support a definition for community banks that would allow regulators to exempt smaller institutions from capital rules and regulations.


Former Federal Deposit Insurance Corp. Chair Sheila Bair opined on the bitcoin phenomenon Dec. 26, writing in Yahoo Finance that the cryptocurrency is a "volatile asset bubble" that regulators should be concerned about. While Bair said regulators should not make their own value judgments about bitcoin, she argued that the regulators should not allow federally insured banks to directly or indirectly support bitcoin speculation.

"What government should do is first make sure our policies don't feed the frenzy," Bair wrote.

Bair also said regulators should closely monitor cryptocurrency markets for fraud, manipulation and illicit activity.

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