WASHINGTON (Reuters) - A new field of top financial policymakers is emerging in Washington.
There has been significant turnover as the United States approaches the anniversary of the enactment of the Dodd-Frank financial oversight law, a response to the worst financial crisis in generations and a severe recession.
A few of the most influential players, such as former Federal Deposit Insurance Corp Chairman Sheila Bair, have recently left, and the new crop of nominated regulators may face tough Senate confirmation battles.
Below is a list of the most powerful people carrying out the revamp of how financial markets and firms are regulated.
--Timothy Geithner, Treasury secretary: Geithner has been the Obama administration’s domestic and international salesman for Dodd-Frank. A former president of the New York Federal Reserve, Geithner is viewed as more sympathetic to Wall Street than some of his regulatory colleagues. He holds a powerful post as head of the U.S. systemic risk council, responsible for drafting the Volcker rule and picking “systemic” firms. Going forward, Geithner or his successor will face the challenge of trying to harmonize U.S. regulations and international reforms in a way that keeps U.S. markets both competitive and closely regulated.
--Daniel Tarullo, Federal Reserve governor: On the Fed board, Tarullo is the point person for financial regulation. He was a law professor at Harvard and Georgetown University, and often gives long-winded, academic speeches on bank capital, supervision and “too big to fail.” He was one of the first high-level U.S. regulators to say excessive Wall Street pay played a role in the financial crisis, and he spooked markets recently by suggesting big U.S. banks could be held to capital levels sharply higher than the Basel III agreement. President Barack Obama has not yet nominated a Fed vice chairman for supervision, but Tarullo is considered a frontrunner.
--Mary Schapiro, chairman of the Securities and Exchange Commission: Schapiro has led the agency with a no-nonsense attitude since being appointed in January 2009. She has a long history as a regulator, having served at both FINRA and the Commodity Futures Trading Commission. She was brought into the chairmanship as a change agent for the SEC, which was reeling from having missed Bernard Madoff’s epic Ponzi scheme and from loosely regulating U.S. investment banks leading up to the financial crisis. Some of her biggest challenges ahead will be revamping market structure in the wake of the May 2010 flash crash, creating a regulatory framework for security-based derivatives, and proving the SEC is a tough watchdog.
Gary Gensler, chairman of the Commodity Futures Trading Commission: An 18-year veteran of Goldman Sachs, Gensler came to the CFTC with Wall Street credibility. His first two years as CFTC chairman, however, have shown him to be more of a tough-nosed regulator than an ally of the financial industry. He has fought for narrow exemptions to capital, margin and clearing requirements for the $600 trillion global swaps market. He has also been an outspoken supporter of controversial new position limits in commodity markets. His mettle will be tested as he leads the CFTC’s work in finalizing derivatives regulations among cries they will harm U.S. companies and capital markets.
Richard Cordray, nominee to head the Consumer Financial Protection Bureau -- The former Ohio attorney general is a new face on the Washington regulation scene. Obama this week picked Cordray to head the new agency, sidestepping some of the controversy he would have faced had he nominated Elizabeth Warren. Cordray, however, is also a critic of the bank industry and as Ohio AG frequently led other states in suing financial firms for misdeeds. If confirmed, Cordray will have to prove he can protect consumers from misleading mortgages and excessive credit card fees without being distracted by an antagonistic relationship with the financial industry.
Martin Gruenberg, nominee for Federal Deposit Insurance Corp chairman: The acting head of the FDIC has big shoes to fill, after Bair left at the end of her five-year term in early July. Unlike Bair, Gruenberg has a low-key public manner. But colleagues warn not to mistake his muted style for a lack of strong beliefs, which include a firm approach to reining in risky bank practices. Those beliefs will be on display as the FDIC finalizes its “orderly liquidation authority,” and tries to convince markets the government can and will dismantle a toppling financial giant. He will also be a critical voice in the debate over U.S. capital reforms.
Thomas Curry, nominee for Comptroller of the Currency: Curry, an FDIC board member, is another Bair ally who worked behind the scenes. He is a registered independent and would be expected to shift the perception that the Office of the Comptroller of the Currency is a friendly regulator to the nation’s largest banks.
Richard Shelby, ranking Republican on the Senate Banking Committee: Shelby has been a staunch opponent of many pieces of the Dodd-Frank law, saying it is a regulatory overreach that could restrict lending and strangle the economic recovery. He successfully batted down Obama’s nomination of Peter Diamond as a Fed governor, and could be a major obstacle to Obama’s financial policymaker nominees.
Barney Frank, ranking Democrat on the House Financial Services Committee: As a namesake of the Dodd-Frank financial oversight law, Frank’s opinions will hold sway as regulators write rules to carry out the legislation’s intent and as lobbyists try to derail it. Frank already caused a buzz when he argued the Fed went too far in cracking down on debit card swipe fees. His other assessments will be just as closely watched.
Reporting by Karey Wutkowski, editing by Matthew Lewis