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If Biden takes the White House in November, we know what's going to happen at most of the financial regulators: new leaders with new agendas. But at the FDIC? That's a different story. Thread: https://www.americanbanker.com/news/would-mcwilliams-stay-on-at-fdic-if-biden-wins
See, unlike a lot of regulators, the FDIC chairman doesn't serve at the 'pleasure of the president.' They can't be fired at-will. And the current chair, Jelena McWilliams, wasn't appointed until June of 2018. That means she's technically on track to serve until mid-2023.
To get a sense of what that timing really means, do the math: if McWilliams led the FDIC for her entire term, she'd end up serving under the Biden and Trump administrations for nearly identical lengths of time, a difference of ~100 days out of five years.
Who cares? Well, the FDIC is one of three federal bank regulators, and having the chair's support is critical for making inter-agency policy for the entire industry. The FDIC is also on the front lines of managing bank failures whenever there's a financial crisis.
So ask yourself: does it matter if a Trump-appointed regulator in with a key role in bank policy and crisis management stays on under a Democratic administration in the middle of a pandemic? If so, read on.
All that said, here's the catch: The FDIC chairman doesn't wield power unilaterally. She presides over and sets the agenda for the five-member FDIC board, and it's the votes of the board that ultimately enacts a given policy. OK, so, what determines the board? Glad you asked.
Seat #1 belongs to the Chairman. Seats #2-3 are held by two other regulators: the Comptroller of the Currency and the director of the CFPB. Those roles are appointed by the WH and confirmed by the Senate. The minority party gets to appoint the remaining two spots.
So what does that mean for policymakers if Biden takes the White House? Well, if McWilliams stays, we could be looking at a federal agency led by a Republican appointee trying to steer a board controlled by Democrats.
To be clear, this isn't the most unusual situation for a FDIC chair to be in. With five year terms, you're bound to overlap with different administrations, and a lot of FDIC chairs end up resigning when a new president comes into power. But that's not what happened in 2008:
When I interviewed @SheilaBair2013, this is what she said about staying:
"It is the chairman’s choice. At the same time, you need to take a hard look at the political landscape when you decide whether to stay and whether you can continue to be effective as a minority chair.”
"It is the chairman’s choice. At the same time, you need to take a hard look at the political landscape when you decide whether to stay and whether you can continue to be effective as a minority chair.”
By basically all counts, Bair's term as a Republican in the minority leading an FDIC board through the financial crisis was a success. What would it take for McWilliams do something similar?
That's enough for one thread. For more: https://www.americanbanker.com/news/would-mcwilliams-stay-on-at-fdic-if-biden-wins
