WASHINGTON (Reuters) - A top U.S. bank regulator this week sold bank stocks that prevented him from taking full charge at the agency, two months after his swearing-in and while his holdings grew in value, according to the agency and ethics paperwork.
Joseph Otting, the Comptroller of the Currency, took office Nov. 27 with millions of dollars invested in a number of banks, according to ethics disclosures filed last year. The comptroller directly regulates some of the nation’s largest banks.
Otting owned shares of JPMorgan Chase & Co and BB&T Corp as well as asset-management firm BlackRock Inc, the ethics paperwork showed. Otting ran OneWest Bank in California for years and his most significant bank stock holdings are in CIT Group, which bought OneWest in 2015.
(For a snapshot of Otting's holdings: tmsnrt.rs/2DCpCj2)
Bank stocks overall have risen about 10 percent since Otting was sworn in.
Otting had two options for shedding those holdings to satisfy federal ethics rules. He could sell immediately, pay tax on the capital gains and step fully into his role as a bank regulator. Or he could recuse himself from day to-day decisions and keep his investments for a while.
Otting chose the second route. He only sold his bank stocks in recent days, agency spokesman Bryan Hubbard said in a statement on Thursday.
“Mr. Otting has now completed his required divestitures and no longer has to observe a general recusal regarding policy matters,” Hubbard said.
The divestment came days after Reuters asked if Otting still held bank stock. Hubbard said on Monday that Otting would sell without the tax hit once ethics officials approved.
For about eight weeks, Otting’s financial ties prevented him from weighing in on bank sanctions, taking part in policy discussions or writing new industry rules.
One ethics expert faulted Otting for having tied his hands as a regulator while he was positioned to expand his wealth. “In the best case, this guy is drawing a government salary without fulfilling the duties of his job,” said Richard Painter, an ethics advisor to former President George W. Bush.
Many of President Donald Trump’s advisers made fortunes in the private sector. Otting’s dilemma shows how fraught it can be when executives transition to a life of public service.
(This version of the story corrects paragraph 9 to say Monday instead of Friday)
Reporting by Patrick Rucker and Pete Schroeder; Editing by Damon Darlin and Richard Chang