Our Take: financial services regulatory update – June 14, 2024

Change remains a constant in financial services regulation. Read "our take" on the latest developments and what they mean.

Current topics – June 14, 2024

1. Biden nominates CFTC Commissioner to lead FDIC

  • What happened? On June 13th, President Biden nominated two CFTC Commissioners to new positions: Christy Goldsmith Romero to Chair the FDIC and Kristin Johnson to be Assistant Treasury Secretary for Financial Institutions. This followed current Chair Martin Gruenberg’s announcement that he would resign once his successor is confirmed in light of the FDIC’s recent workplace culture challenges.
  • What are their backgrounds?
    • Christy Goldsmith Romero has been a CFTC Commissioner since 2022. Previously, she served as the special inspector general for the Troubled Asset Relief Program (TARP) since 2012 following several years on the staff of the SEC.
    • Kristen Johnson has also been a CFTC Commissioner since 2022, where she went from teaching law at Emory University with a focus on financial markets regulation and the implications of financial innovations such as distributed ledger technology and artificial intelligence.
  • What’s next? Both nominations will now go through the Senate confirmation process including a hearing before the Senate Banking Committee.

Our Take

The clock is ticking to complete double agency turnover before the election. There was a relatively fast turnaround for Biden to nominate Christy Goldsmith Romero to lead the FDIC after Gruenberg lost the support of Senate Banking Chairman Sherrod Brown (D-OH) and announced his resignation. In order to get nominees confirmed before the election potentially changes the makeup of the Senate, it is understandable that Biden would choose candidates who have been previously vetted and confirmed. Choosing Johnson to take on the financial institutions role at Treasury indicates that the Administration may be seeking to develop cross-agency regulatory frameworks for innovative technologies due to her expertise on the implications of those technologies. Aside from the uncertain outcome of the Presidential election, Democrats are defending 23 of the 33 Senate seats up for election this year. If Romero is confirmed this year, that could leave a Democrat in charge of the FDIC for the next five years and provide some insurance against new Republican leadership of the other banking agencies rolling back interagency rules. Separately, Biden now needs to find two nominees to fill CFTC vacancies to keep the CFTC from operating with a 2 -1 Republican majority. In the meantime, the clock is ticking to fill all of these positions and to complete both agencies’ rulemaking agendas, which may be on hold for the time being.

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