Trump appointee resigns after fight with Democratic bank regulators
By Lananh Nguyen
The Republican chair of the Federal Deposit Insurance Corp., who was appointed by former President Donald Trump, said late last week that she was cutting short her term after a clash with Democratic banking regulators. Jelena McWilliams, who started a five-year term as chair in June 2018, will resign effective Feb. 4, she wrote in a letter to President Joe Biden. She is also stepping down as a director of the FDIC’s board. McWilliams is the only Republican on the five-member board, and her departure will add a second vacancy.
“Throughout my tenure, the agency has focused on its fundamental mission to maintain and instill confidence in our banking system,” she wrote. “Today, banks continue to maintain robust capital and liquidity levels to support lending and protect against potential losses.”
Her exit comes after Rohit Chopra, a member of the FDIC board and the new director of the Consumer Financial Protection Bureau, complained earlier this month that McWilliams had refused to recognize attempts by Democratic regulators to review rules about bank mergers. In an essay in The Wall Street Journal, McWilliams called the conflict a “hostile takeover” by other board members.
McWilliams has mostly adhered to Republican ideological lines during her tenure. That made her something of a barrier to Biden’s agenda, which involves shifting the federal government’s stance on big issues like climate change and income inequality. The Democrats on the board of the FDIC, which is chiefly known for backing consumer deposits but has a hand in overseeing all of the nation’s banks, contended that McWilliams was stonewalling attempts by the majority to set policy. The partisan fight atop the sleepy bank regulator, believed by some experts to be part of an effort by Democrats to unseat McWilliams, spilled into public view in early December. Chopra and two other Democrats on the board — Martin J. Gruenberg, a longtime member, and Michael J. Hsu, the acting comptroller of the currency — voted over email to request public comment on the issue of bank mergers. A statement on the request was posted not on the FDIC’s site but on the site of the consumer bureau that Chopra leads. The FDIC soon released a statement saying it had not approved such a request for comment. A week later, after a meeting on Dec. 14, Chopra said in a statement, “This approach to governance is unsafe and unsound.” In refusing to recognize the vote by other board members, he wrote, McWilliams had made “an attack on the rule of law.” She fired back the next day, accusing other board members of trying to “wrest control” from the head of an independent agency. Banking industry groups urged calm and transparency. Pat Toomey, a Republican who sits on the Senate Banking Committee, issued a statement Friday criticizing the Democratic board members for ending the bipartisan cooperation that has endured during the FDIC’s 88-year history. “The recent, reckless effort by Director Chopra and Interim Director Gruenberg to take over the FDIC board leaves a dark mark on both the FDIC and their own personal records,” Toomey wrote. “I am deeply troubled to see the administration support this extremist destruction of institutional norms and unprecedented action to undermine the independence and integrity of our financial regulators.” The Consumer Financial Protection Bureau did not immediately respond to a phone message and email requesting comment.
The Consumer Bankers Association, a trade group for banks, called for the FDIC board vacancies to be filled before new policies are put in place.
“The agency — whose board members have worked to balance the will of the majority and minority for nearly a century — will be without any ideological balance for the first time in recent memory,” the association’s CEO, Richard Hunt, said in a statement. “To preserve confidence in the FDIC, the board of directors should not pass any new rules or regulations until a replacement board member representing the minority party is seated.”