Trump-appointed bank regulator resigns after partisan fight

A top US banking regulator appointed by former president Donald Trump announced on Friday she is resigning from her post, paving the way for the Biden administration to more directly shape financial oversight.

Jelena McWilliams, who has served as chair of the Federal Deposit Insurance Corporation since June 2018, said she will depart the organisation on February 4, more than a year earlier than when her term was set to expire

The decision comes after a rift between the top leadership at the FDIC, which insures deposits held at the nation’s lenders, and the Consumer Financial Protection Bureau, which serves as the US consumer watchdog, over a review of bank mergers.

The situation pit McWilliams against FDIC board member Martin Gruenberg and Rohit Chopra, director of the CFPB, both Democrats. Gruenberg and Chopra voted as part of a Democratic majority to launch a review of rules related to the bank merger approval process, which McWilliams opposed.

McWilliams detailed the tussle in an opinion piece for The Wall Street Journal earlier in December, calling the situation “unprecedented”.

“This conflict isn’t about bank mergers. If it were, board members would have been willing to work with me and the FDIC staff rather than attempt a hostile takeover of the FDIC internal processes, staff and board agenda,” she wrote. “This episode is an attempt to wrest control from an independent agency’s chairman with a change in the administration.”

In her resignation letter to President Joe Biden, McWilliams said it was a “tremendous honour” to serve at the helm of the FDIC and underscored the robustness of the financial system through one of the worst economic contractions in history last year.

“The unexpected shock of Covid-19 tested the resilience of our financial system beginning in March 2020, and the FDIC took swift actions to maintain stability and provide flexibility for banks and consumers,” she wrote. “The core of our financial system not only weathered the storm, but was a tangible source of strength for the American economy.”

Before her time at the FDIC, McWilliams worked as chief counsel to the Senate committee on banking, housing and urban affairs and formerly served as a lawyer at the Federal Reserve’s board of governors.

With her departure, Biden has another open regulatory post to fill. The top supervisory job at the US central bank remains vacant following the expiration of Randal Quarles’ term in October.

The former Fed governor, who left the institution altogether in December, was appointed to that position by Trump in 2017.

Quarles faced criticism from the progressive wing of the Democratic party for easing some of the rules and regulations restricting banks in the aftermath of the global financial crisis.

Candidates for both the FDIC position as well as the vice-chair for supervision role at the Fed are expected to take a more hardline stance on financial oversight matters.

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