The U.S. Senate voted May 24 to confirm Jelena McWilliams as the head of the Federal Deposit Insurance Corp. in a 69-24 vote. McWilliams will replace Martin Gruenberg as FDIC chair, who is currently the last Obama-era appointee to head a major banking regulator.
McWilliams most recently served as chief legal officer of Fifth Third Bancorp and had previously served as chief counsel to the Republican side of the Senate Banking Committee.
In January, McWillilams vowed to reduce community bank consolidation by promoting de novo bank formation if confirmed as FDIC chair. McWilliams specifically called out Basel III for imposing stringent capital and liquidity requirements on smaller banks and said she would like to revisit the Volcker rule.
American Bankers Association President Rob Nichols said his team looks forward to her initiatives on new bank formation, while Independent Community Bankers of America President and CEO Rebeca Romero Rainey said she hopes McWilliams will "help alleviate the substantial regulatory burdens hindering community bank lending."
Analysts expect McWilliams to install a cultural change from Gruenberg, whose tenure at the FDIC was marked by ratcheting up bank capital requirements and other postcrisis controls. Compass Point's Isaac Boltansky wrote May 24 that McWilliams shares "broad conceptual support for the Trump administration's deregulatory agenda." Boltansky added that he would expect McWilliams to embrace industrial loan company charters and scrap the FDIC's 2013 guidance discouraging deposit advance products, which would allow banks to re-enter the payday lending space.
Sen. Elizabeth Warren, D-Mass., voted against the nomination and warned that McWilliams' confirmation would pave the way for Community Reinvestment Act reform.
"Banks and [President Donald] Trump's appointees they send to Washington want to make passing the test even easier," Warren said.
Once McWilliams is sworn in as chair, Gruenberg could still technically serve as an FDIC board member through the end of the year. But Gruenberg has said he is undecided about whether he will leave once McWilliams arrives. Politico reported that Senate Minority Leader Chuck Schumer, D-N.Y., is prepared to recommend Gruenberg as vice chair, as it is custom for the minority party to nominate the FDIC second-in-command. But the White House is rumored to dislike the idea of Gruenberg staying on the board, hinting that the administration may not honor the tradition, Politico reported, citing an anonymous source.
McWilliams' confirmation marks the second big change in the financial regulatory world May 24. During a roll call vote for her confirmation, Trump signed into law the legislative package reforming large swaths of the postcrisis Dodd-Frank regulatory framework.
