WASHINGTON (Reuters) – U.S. lawmakers are expected to grill two of President Donald Trump’s nominees for top banking oversight roles about their past lives as financiers at a joint hearing on Thursday.
Randal Quarles, tapped to be vice chairman for supervision at the Federal Reserve, and Joseph Otting, the nominee to be Comptroller of the Currency, are expected to be confirmed by the Republican-controlled Senate. But Democrats will use the public forum to scrutinize the pair’s careers in the wake of the 2007-2009 financial crisis.
Otting’s former role as chief executive of OneWest, a Californian lender that foreclosed on 36,000 homes after striking a lucrative deal with the Federal Deposit Insurance Corp, is expected to attract attention. Treasury Secretary Steven Mnuchin, who hired Otting at OneWest when he was its CEO, was similarly pressed on the bank’s mortgage servicing practices during his confirmation hearing.
Quarles, a former Wall Street lawyer and U.S. Treasury official, benefited from government support for troubled and failed banks when he worked at private equity firm Carlyle, something that lawmakers are expected to question him about. Quarles currently heads Cynosure Group, a Utah private investment firm he helped establish in 2014.
Given that current Senate rules require only a slim majority to approve presidential nominees, neither is expected to face a realistic threat to their confirmation.
Wall Street has been eager for the positions to be filled. If confirmed for the vice chair slot, Quarles will take a leading role in banking supervision at the Fed, which has seen its role monitoring the financial sector ramp up as part of the 2010 Dodd-Frank financial reform law.
The vice chair role was created as a result of that law and was never filled during the Obama administration. Former Fed governor Daniel Tarullo effectively ran banking supervision until he stepped down in February, overseeing a strict regime that put banks through rigorous annual “stress tests.”
Trump laid out his plans last month to loosen the leash put on Wall Street banks. Quarles is viewed as an industry-friendly figure who has spoken out in the past against breaking up big banks and who has also talked about refining Obama-era financial rules.
If he is confirmed, Quarles will also vote on monetary policy as one of seven members of the Fed’s board of governors.
As comptroller of the currency, Otting would be tasked with regulating national banks, monitoring the amount of risk banks take on when they lend to highly indebted companies and their adherence to money laundering rules.
A spokeswoman for the Senate Banking Committee declined to comment on how quickly the panel could vote on the pair, but Senate Republicans agreed to stay in session two additional weeks in August with an eye toward working through a backlog of nominees.
Editing by Carmel Crimmins and Tom Brown