No Rules for Progressive Radicals
Biden appointees try to stage a coup against the director of the FDIC on bank mergers.
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The Editorial Board Follow
Dec. 10, 2021 6:05 pm ET
Consumer Financial Protection Bureau Director Rohit Chopra speaks before a Senate Committee on Banking, Housing, and Urban Affairs hearing in Washington, D.C., Oct. 28.PHOTO: ROD LAMKEY/ZUMA PRESS
Progressives are breaking institutional norms left and right to impose their agenda. On Thursday Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra went so far as to attempt a de facto coup against Federal Deposit Insurance Corporation (FDIC) Chair Jelena McWilliams, a Trump appointee.
Mr. Chopra wants to use bank merger reviews to exercise more political control over lending. The 1960 Bank Merger Act requires the Federal Reserve Board of Governors, the Office of the Comptroller of the Currency and the FDIC to consider the “convenience and needs of the community to be served” when reviewing merger proposals.
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Democrats use this provision as a toll booth to coerce lending to favored causes in exchange for approving mergers. But Ms. McWilliams, who was appointed in 2018 to a five-year term as chair, has refused to take banks hostage. Since Mr. Chopra has no authority over bank mergers as CFPB director, he’s trying to overrule Ms. McWilliams in irregular fashion.
Mr. Chopra is an ex officio FDIC board member, as is acting Comptroller of the Currency Michael Hsu. Also on the board is Martin Gruenberg, an Obama holdover who presided over “Operation Choke Point.” That was the FDIC and Justice Department pressure campaign to restrict banking access to politically unpopular industries, including pay-day lenders and firearm dealers.
While Ms. McWilliams is out-numbered by the liberals three to one, FDIC bylaws have long given the Chair the ability to set the board agenda. The liberals can’t put any regulatory change or action up for a vote without her consent. Mr. Chopra has ignored these rules.
Our sources say Mr. Chopra demanded in late October that the FDIC issue a request soliciting public comment on how to toughen bank merger reviews. A request for public comment is the first step for changing agency procedures or regulations. While disagreeing with his opinion that merger reviews were too lenient, Ms. McWilliams agreed in the spirit of collegiality to ask career staff to draft a request for public comment. Mr. Chopra wasn’t satisfied.
While FDIC career staff were working, Mr. Chopra pushed for his own proposal. On the Friday after Thanksgiving, a CFPB staff member shared with FDIC board members his proposed request for public comment. His proposal included leading questions such as whether the CFPB director should be consulted on mergers.
Fast forward to this week. FDIC staff on Monday sent board members’ deputies their own proposed request for public comment along with critical feedback of the bureau draft. Messrs. Chopra and Gruenberg sought to vote in favor of the bureau’s version anyway, which they couldn’t do without the chair’s approval. Then they issued a statement falsely claiming that the board had approved it.
The FDIC rushed to issue a correction: “The Consumer Financial Protection Bureau (CFPB) posted on its website a document, purportedly approved by the FDIC, requesting comment on bank mergers. No such document has been approved by the FDIC” and “there was no valid vote by the Board” and no such request for public comment “has been approved by the agency for publication in the Federal Register.”
As the FDIC noted, the board has a “proud 88-year history of Board members working together in a collegial manner” despite “countless philosophical differences on substantive issues among Board members over the years.” Simply put, Mr. Chopra’s attempted coup is unprecedented.
Mr. Hsu’s role is somewhat murky. We’re told he initially went along with Messrs. Chopra and Gruenberg but had second thoughts. He could be a candidate for another executive office that requires Senate confirmation. The Comptroller’s office issued a statement that Mr. Hsu “has given the Bank Merger Act significant consideration” and “will continue to work collaboratively with other regulators on this and other issues.”
***This run around institutional norms is standard procedure for Mr. Chopra, an Elizabeth Warren protege. Politico reported that on his last day as a Federal Trade Commissioner he cast by email as many as 20 “zombie votes.” These will allow him to dictate the FTC agenda after his departure despite its current 2-2 partisan split. He’s trying to run the CFPB, FTC and FDIC all at the same time.
All of this is worth keeping in mind as Senators consider Mr. Biden’s Federal Communications Commission nominee Gigi Sohn, who has a long record of strident partisanship. The White House is also considering Richard Cordray, another student of Ms. Warren and mentor to Mr. Chopra, to be vice chairman for supervision at the Fed.
Democrats criticized President Trump for breaking political norms, but his appointees for the most part respected regulatory due process. Mr. Biden’s radicals in a hurry are willing to roll over norms to impose their agenda.
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