Biden signals Wall Street crackdown with transition picks
News of the appointments buoyed the hopes of progressives who have been skeptical about whether Biden would try to rein in Wall Street.
President-elect Joe Biden’s transition team has recruited a who’s-who of Wall Street critics to help launch his administration, the latest indication that the days of light-touch bank regulation under President Donald Trump are coming to an end.
Leading the transition’s preparation to run financial regulatory agencies is Gary Gensler, an Obama-era regulator — and former top Goldman Sachs executive — who enraged big banks by imposing sweeping new rules on the industry in the wake of the 2008 financial crisis.
Gensler’s team includes former Democratic congressional aides who played a major role in drafting tougher laws for financial firms after the subprime meltdown and later fought efforts to water them down. One member has rattled bank executives for years as the head of one of Washington’s leading financial reform groups, Better Markets. Another is an advocate for the Postal Service offering financial services that would compete with banks.
“The larger the bank the more nervous they are,” said Cam Fine, the former CEO of the Independent Community Bankers of America, a leading industry association for small lenders. “This group is enormously consequential.”
News of the appointments buoyed the hopes of progressives who have been skeptical about whether Biden would try to rein in Wall Street. Bharat Ramamurti, a former aide to Sen. Elizabeth Warren (D-Mass.), said it was an “all-star” team of “smart, aggressive experts who understand exactly how our current financial rules fall short.”
To be sure, the involvement of Wall Street critics in the agency review process doesn’t guarantee that Biden will adopt their views. The team’s role is part reconnaissance and part preparation for Biden’s coming nominees. One transition official said it was not their job to create policy.
Biden, for his part, is no enemy of Wall Street. During the campaign, he and groups working on his behalf collected $74.4 million from the securities and investment industry, outraising Trump by $56.3 million, according to Open Secrets. Private equity executives, a major target of Warren and other liberals, were also among Biden’s most prominent financial backers.
But progressives are hopeful that the president-elect will heed the calls of many in his party to crack down on financial firms that they say escaped significant penalties for their role in the 2008 crisis and have benefited from looser regulation and tax cuts under Trump.
“Joe Biden branded himself as a candidate who evolves along with the rest of the Democratic Party, and that’s clearly true on financial regulation,” said Jeff Hauser, executive director of the Revolving Door Project. “Biden’s team is vastly more independent from the financial sector than Hillary Clinton’s team was set to be four years ago.”
Indeed, the announcement of the transition team fed the worst fears of bankers that Biden could lurch left when it comes to financial oversight. It “didn’t give me a warm fuzzy feeling,” one official at a major bank said. Bank lobbyists said it was a bad sign that there weren’t more transition team members with competing views, including industry representatives.
Personnel decisions have taken on even greater importance now that Republicans have a strong chance of controlling the Senate after a pair of runoff elections in Georgia scheduled for January. A GOP-led Senate would stop the legislative agenda Democrats had planned in a “Blue Wave” election — and it could also block Biden’s appointment of some of the most progressive regulators.
Chris Scribner, who lobbies for banks as senior vice president of the Smith-Free Group, said the transition team has put together agency review teams whose members understand how regulatory authority can work even in the absence of legislation.
“Financial services firms should expect heightened scrutiny no matter the make-up of the Congress and even as the incoming administration’s policy agenda remains a work in progress,” Scribner said.
The Biden transition team is manned from the top down with individuals who have clashed for years with the finance industry.
Ted Kaufman, who co-chairs the transition operation, called for the breakup of big banks when he filled Biden’s U.S. Senate seat in the early years of President Barack Obama’s administration. The new transition officials responsible for banking policy echo his views and took on similar fights after the crisis.
Gensler, the leader of the transition’s review of banking and securities regulators, became an unexpected liberal darling as Obama’s first chairman of the Commodity Futures Trading Commission, where he led efforts to curb what was a then-unregulated financial derivatives market that fueled the 2008 Wall Street meltdown.
Gensler’s team includes several key Washington players also known for challenging the banking industry.
Dennis Kelleher, president and CEO of Better Markets, has accused the biggest U.S. banks of engaging in “an unrelenting crime spree.” His advocacy group has gone head-to-head with bank lobbyists on the Hill, at regulatory agencies and in the courts.
Center for American Progress managing director Andy Green was a lead congressional staffer in the drafting of the so-called Volcker Rule, which sought to curb speculative trading by big banks.
Washington Center for Equitable Growth policy director Amanda Fischer is a former staffer to House Financial Services Chair Maxine Waters (D-Calif.), Sen. Sherrod Brown and Rep. Katie Porter (D-Calif.). In 2018, while working for Brown at the Senate Banking Committee, she was a key aide leading the opposition to a deregulation bill that Congress passed with help from centrist Democrats.
University of California Irvine School of Law Professor Mehrsa Baradaran has warned in her research that Black Americans suffer from poor access to financial services. She has championed the idea that the Postal Service could help remedy the situation by offering banking products, a move fiercely opposed by the nation’s banks.
Fine, who worked closely with many of the officials after the 2008 crisis when he was one of banking’s top lobbyists, said “their views about Wall Street’s activities — especially the mega-banks but also the very largest regionals — are well known.”
“They believe in tighter controls and greater regulation around consumer protections and investor protections,” he said. “That is a change over what’s been going on the last four years, where you’ve had an erosion of those protections.”
Jonah Crane, a partner at regulatory advisory firm Klaros Group and a former Obama Treasury official, said the transition team reflects academics and policy experts “who understand the structural inequalities in our economy, and want to see the financial sector play a bigger role in building a more inclusive society.”
“That is resonant with the themes of the campaign,” Crane said. “And I would expect that focus to carry through to the new administration no matter which individuals end up with actual administration roles.”
Still, the transition team roster left lobbyists calling for greater industry input in the planning for key financial agencies.
“I thought it was a missed opportunity,” Consumer Bankers Association President and CEO Richard Hunt said. “It would have been better had you had more voices at the table.”