FDIC to appoint new leader
As the federal bank regulator FDIC’s chairman Sheila Bair steps down from her five year term as of July 8, many have speculated the Presidential nomination for the appointment of Martin Gruenberg as her replacement. Gruenberg is currently the vice chairman and has been at the FDIC since 2005 and served for 12 years prior as Lead Counsel to the low-key, spotlight-avoiding Democratic Senator Sarbanes.
Because the nomination requires Senate confirmation and the world of politics isn’t currently in a “let’s get along” era, there could be resistance from the Republican party if they believe Gruenberg is not in line with Bair’s gutsy moves and willingness to speak out against bad politics. Bair was among the first federal officials to warn of the impending doom of risky lending and during her term, the FDIC shut down more banks than any period since the S&L crisis in the 80s. Bair and Geithner went head to head frequently over bailouts and golden parachutes, and she even made the unpopular statement that banks should reduce principle amounts for troubled homeowners- before we were calling it a housing “crisis.”
Vacancy at the CFPB
Obama isn’t just called to replace Bair, there are several other financial institutions currently without leadership, for example, the new Consumer Financial Protection Bureau (CFPB) was created by the financial overhaul law and has been formed by Elizabeth Warren to open in July, but without an acting director, the agency cannot technically function in full.
Some are saying the CFPB is making positive steps and many are calling for Warren herself to become the director, but it is unrealistic for her to take the reigns as the very existence of the agency is highly contented with key republicans vowing to block a vote on any nominee for director until the Democrats are willing to lessen CFPB’s authority and powers, most notably until its funded by a yearly appropriation by congress instead of being treated as an automatic expenditure.
Warren supporters are outraged at rumors that Obama is considering nominating wealthy banker and Wall Street insider Raj Date, former Senior VP of Capital One, and former managing Director of Deutsche Bank, former U.S. Treasury Department official, and current CFPB associate director.
Warren critics are noting various indiscretions, most notably that she lied about her role as a special adviser to the White House where she offered secret, closed-door meetings with states’ attorneys general regarding the robosigning debacle. Supporters note there is nothing illegal about advising state agencies while critics note she lied about it.
Some claim Warren is not suited for the role while others claim Obama is sexist and elitist by leapfrogging a wealthy male banker above a soft spoken woman, yet others note it matters not who is in the leadership role because they will block any nomination until the agency is redesigned.
But wait, there’s more- the OCC
The Office of the Comptroller of the Currency (OCC) has made headlines here at AGBeat for their role in breaking with the 50 states’ attorneys general as they neared a compromise between a dozen federal agencies (including the OCC) as to how to penalize big banks for their role in illegally foreclosing after lengthy investigation. Critics claim the OCC pursuing their own route stunted the foreclosure probe and has left the states with little power to penalize banks for their role in the crisis.
Perhaps the OCC has made such a mess because it hasn’t had a permanent leader since John Dugan resigned in August of 2010 at which time interim Chairman John Walsh took over, a move which has been contested, with various entities calling for his resignation. It is still unclear as to whether or not Obama will ultimately nominate Walsh to take over permanently but it seems unlikely given the recent scandals, leaving yet another role unfilled with no promising prospects in sight.
And yet more unfilled seats – Federal Reserve
The Federal Reserve’s Board of Governors has two openings with the most recent nominee Peter Diamond withdrawing his name from the race after coming under attack during the nomination process. Diamond supporters like Democratic Senator Harry Reid note Diamond is a Nobel Prize winner yet “isn’t good enough” for Republicans to sit on the Fed’s board, claiming the party seeks to bottleneck Obama’s nominees to limit him to a single term.
On the other side of the aisle is Diamond critic, Republican Senator Richard Shelby who said of the nominee, “A lot of people had a lot of questions, not just me … although he’s a smart man, he’s a Nobel Prize winner, look what he was in — look in the weeds — he supported all the printing of money, borrowing money, stimulus stuff. He would just be ratifying what the whole Obama administration’s doing through the Fed.” Shelby noted the Republican party could not support any nominee who “advocated government intervention to fight unemployment.”
And yet another seat- the FHFA
Government run housing agencies Fannie Mae and Freddie Mac are overseen by the Federal Housing Finance Agency currently has no leader after several months of stonewalling between Republicans and Obama over his nominee Joseph Smith, North Carolina’s top banking regulator which led to his withdrawing his name.
Smith critics claim he would not be able to act independently of the Obama administration and would act as an arm for their agenda, fearing actions like mortgage balance reduction for homeowners. Supporters point to his years of leadership and his positive track record. It is being said that Obama will not re-nominate Smith and there is currently no nominee being rumored.
The list isn’t over – Commerce Dept.
As the U.S. Commerce Department loses Secretary Gary Locke to his new post as the U.S. Ambassador to China, Obama has nominated John Bryson as the next leader. Bryson helped found the controversial (to some) National Resources Defense Council (NRDC) and is a retired electric company executive. Senator James Inhofe calls the NRDC a “radical environmental organization” and says he and others will “work actively to defeat his nomination.”
Supporters point to Bryson’s dedication to the environment making him a good candidate for job growth and growing economy given the dollars flowing in and out of alternative energies and the like, while many Republicans say they will not vote to confirm Bryson or any nominee until the Obama administration agrees to new free trade agreements.
Yet another – Obama’s Council of Economic Advisers
The recent announcement of White House economic adviser Austan Goolsbee stepping down to “preserve his tenure” at the University of Chicago leaves the leadership role at Obama’s Council of Economic Advisers empty.
The weakened economy makes this role particularly challenging and while no one has been named specifically to replace Goolsbee, it is being rumored that they are looking outside of the Obama administration for the new leader. Obama critics point to Goolsbee’s departure as proof of a failed economic strategy at the Presidential level.
Last but not least, the new OFR
The Office of Financial Research (OFR) is newly formed by the Dodd-Frank Wall Street Reform and Consumer Protection Act and will act within the Treasury Department to “improve the quality of financial data available to policymakers and facilitate more robust and sophisticated analysis of the financial system.” The OFR still has no official leader.
In a hearing in May, U.S. Deputy Secretary of the Treasury Neal Wolin was asked when the OFR would have an individual nominee for the Director role to which he noted it would be “very soon.” We anticipate a nominee this summer, but no names have even circled around the rumor mill as of yet.
How this impacts Realtors
What does all of this mean? The answer to this question depends on which side of the aisle you sit on. Democrats claim Republicans are stonewalling all nominees in hopes that they will stall Obama’s run for a second term while Republicans point to repeated instances of nominees having questionable agendas and an inability to act independently from the President.
Real estate is highly dependent upon the structure of the financial agencies within the government as it touches endless facets within the industry. If any agency is too far to the left, it’s a welfare state where Uncle Sam owns all the homes, but if it’s too far to the right, the system is left to fail naturally, so the pendulum swings both ways.
How you communicate with clients is governed by these agencies, how they obtain a mortgage is impacted by these agencies, the value of their home is overseen by these agencies, their employment and ability to keep their home is impacted by these agencies, how the foreclosure or short sale process occurs is impacted by these agencies and ultimately, how you get paid is influenced by these agencies.
It is important to keep your eye on the ball and focus on your local market, but you should also pay attention to the bigger picture and know where the industry as a whole is going because there is nothing worse than waking up one day completely aware of new legislation that restricts the very way you do your job.