By Pete Schroeder and Michelle Price
WASHINGTON (Reuters) – Christy Goldsmith Romero is expected to be grilled on whether she has the experience to overhaul the scandal-hit Federal Deposit Insurance Corporation (FDIC) and oversee the nation’s banks when she appears before the Senate on Thursday.
A Democratic member of the Commodity Futures Trading Commission, Goldsmith Romero was nominated by President Joe Biden last month to replace Martin Gruenberg, who is stepping down as FDIC chair after a probe found widespread sexual harassment and other misconduct at the bank watchdog.
In prepared testimony posted by the Senate Banking Committee on Wednesday, she promised a “complete overhaul” of the agency’s culture, adding she would bring “accountability” to the watchdog.
Beyond safeguarding deposits and supervising banks, the FDIC is a key player in rule-writing efforts that would impose new guardrails on banks and their executives, including contentious new capital hikes. Getting Goldsmith Romero confirmed before the November presidential election could cement Democratic leadership at the agency for years to come and ensure those rules are implemented.
Senators are expected to question Goldsmith Romero on how she will fix the FDIC’s cultural issues, handle the “Basel” capital hikes and rules on bank debt and banker pay, and whether she has sufficient bank supervisory expertise, analysts said.
“Commissioner Goldsmith Romero has little experience in banking regulation, so the hearing will be the first opportunity for industry stakeholders, including bank investors, to hear her views on regulation,” Brian Gardner, Stifel Chief Washington Policy Strategist, wrote in a note this week.
Goldsmith Romero referred Reuters to the White House which did not respond to a request for comment.
Investors and regulators continue have concerns about the health of the country’s regional banks which have been squeezed by high interest rates that contributed to three bank failures last year. She may be asked about the agency’s handling of that crisis, as well as recent troubles at fintech companies which partnered with FDIC-regulated banks.
An attorney with a background in enforcement who previously oversaw a 2008 crisis bank bailout program, Goldsmith Romero is backed by Democratic progressives but is generally seen as a non-contentious pick and has influential supporters in Republican circles, Reuters reported. She was unanimously confirmed by the Senate twice before.
“Goldsmith Romero’s no-nonsense, nonpartisan, inclusive, rigorous, and data-driven leadership style that holds people accountable is also exactly what the FDIC needs,” Dennis Kelleher, CEO of Better Markets, a Washington group that advocates for stricter regulations, said in a statement.
Sherrod Brown, the Democratic chair of the Banking Committee, did not immediately provide comment on Wednesday.
Nominees need 51 votes to be confirmed in the evenly divided Senate where Democratic Vice President Kamala Harris can break a tie. But with contentious issues on the table and hardline Republicans vowing to oppose Biden nominees to protest former President Donald Trump’s conviction in May, some analysts expect the process could drag on.
“The question is whether the Republicans try to peel off a couple of Democrats against her,” Ian Katz, a managing directorat Capital Alpha Partners wrote in an email to Reuters.
“They won’t vote for her, but that’s not the same as going all out to stop her.”
Senator Tim Scott, the most senior Republican on the Senate Banking Committee, plans to press her and the other nominees on their qualifications, and also wants to know if they will stick to their prescribed mandates, according to his spokesperson.
Kristin Johnson, another Democratic CFTC Commissioner, and Caroline Crenshaw, a Democratic member of the Securities and Exchange Commission, will also testify at the Thursday hearing.
Biden nominated Johnson to be the Treasury Department’s assistant secretary for financial institutions, and renominated Crenshaw to her role as SEC commissioner.
Johnson declined to comment, while Crenshaw’s office did not immediately respond to a request for comment.
(Additional reporting by Christine Prentice, and Douglas Gillison; Editing by Nick Zieminski)
Comments