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Washington Wrap — Congress to move on Dodd-Frank reform, FDIC nominee next week

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.

On Capitol Hill

Legislators will move next week on two long-anticipated actions in the financial regulatory space: possibly passing Dodd-Frank reform and potentially confirming Jelena McWilliams as chair of the Federal Deposit Insurance Corp.

On May 22, the U.S. House of Representatives will vote on the Senate's Dodd-Frank package as-is. If the bill passes, it will head to President Donald Trump's desk, where the White House says he will sign it.

The House agreed to advance the Senate bill without any changes on the condition that the Senate moves on a second financial regulatory reform package. Although the contents of that package are still being negotiated, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said May 17 that it will likely be focused on capital formation, not banking rules. Hensarling said he would be targeting committee-approved provisions that concern barriers to entrepreneurship and launching initial public offerings. He said many of the provisions had bipartisan support.

The U.S. Senate, meanwhile, will vote to confirm McWilliams as FDIC Chair sometime next week. A spokesman for Senate Majority Leader Mitch McConnell, R-Ky., confirmed that McWilliams' confirmation is on the docket for floor consideration, and that the timing for the vote has not been decided.

McWilliams, the chief legal officer for Fifth Third Bancorp, has said she would prioritize community bank regulatory relief if confirmed to the position.

Current FDIC Chair Martin Gruenberg, whose term as an FDIC board member runs through the end of the year, has said he is undecided about whether he will stay on the board if McWilliams succeeds him. Politico reported that Senate Minority Leader Charles Schumer, D-N.Y., plans on nominating Gruenberg for an extended tenure at the FDIC, as vice chair. The minority party usually picks the vice chair, but Politico also reported that the White House appears unhappy with the thought of Gruenberg remaining on the board.

At the Fed

The nomination hearings for two of President Donald Trump's picks to the Federal Reserve were largely devoid of fireworks, though both signaled their openness to easing regulatory requirements on banks.

Michelle Bowman, a former banker who is currently Kansas' bank commissioner, said she particularly wanted to lessen the regulatory burdens for community institutions. Trump picked her for a Fed Board of Governors spot designated for community banking specialists.

The larger focus was on Trump's nominee for Fed vice chairman, economist Richard Clarida, who said he thinks there is room to make regulations more efficient but praised the "substantial gains" from the post-crisis regulatory framework.

In other Fed personnel news, the San Francisco Fed has launched its search for a new leader. Its current president and CEO, John Williams, is leaving to take the top job at the New York Fed next month.

Fed Vice Chairman for Supervision Randal Quarles continued outlining his vision for regulatory reform. Quarles said in a May 16 speech that the Fed should consider decreasing a set of capital requirements for the U.S. subsidiaries of large foreign banks.

Other News

Congress may be too late to overturn the Consumer Financial Protection Bureau's payday loan rule. The Congressional Review Act gives Congress only 60 legislative days to overturn agency rulemaking, and some say the clock has expired for the CFPB's rule requiring lenders to conduct repayment tests on payday loans.

Former CFPB Director Richard Cordray tweeted May 17 that Congress "did not have the stomach" to repeal the rule by the deadline of May 16.

But the CFPB itself, under the leadership of Acting Director Mick Mulvaney, still plans on rewriting the rule.

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