President Donald Trump’s push to roll back Wall Street regulations is being held up by his inability to fill open seats at the two main agencies charged with overseeing the financial industry.
The White House’s inaction has left the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission with just two members apiece, one from each political party. That’s given the lone Democrats at each regulator the unusual power to block policy moves they disagree with.
The dynamic is putting a spotlight on the SEC’s Kara Stein and the CFTC’s Sharon Bowen, two commissioners who have been full-throated supporters of tightening industry rules after the 2008 financial crisis. Instead of being shunted aside as Republicans took control of the government this year, the two are being heralded as big impediments to Trump’s deregulatory agenda.
“Many are waking up now to the reality that two Democratic commissioners at two little regulators may stand in the way,” said Tyler Gellasch, a former aide to Stein who’s now executive director of the Healthy Markets Association, whose members include mutual funds and other large investors. “They don’t get to write the rule, but they can stop it.”
The two Democrats’ sway looms especially large because Republicans and Trump have made little progress on Capitol Hill trying to repeal the 2010 Dodd-Frank Act, the post-crisis law that loaded new rules on Wall Street. With Congress bogged down on other contentious issues and little consensus about rewriting Dodd-Frank, the Trump administration will need to rely on federal agencies such as the SEC and CFTC to provide the promised regulatory relief.
‘Easily Erased’
That point was underscored last month by Mark Calabria, the chief economist for Vice President Mike Pence, who said that the Obama-era rules could be “easily erased once we have new regulators in place."
Trump has chosen securities lawyer Jay Clayton to run the SEC and CFTC Commissioner J. Christopher Giancarlo to head that agency. Their nominations are pending in the Senate.
The Senate Banking Committee approved Clayton on Tuesday, sending his nomination for a vote in the full chamber. Even if Clayton is in place, Stein could still block Republicans’ efforts under the agency’s quorum rules by not showing up at a vote.
The administration will need to fill additional commissioner seats at both agencies if it wants to break the logjam. Still, getting nominees vetted and approved by the Senate will take months -- and Trump hasn’t announced any other picks for the five-member commissions.