By Pete Schroeder and Michelle Price
WASHINGTON (Reuters) -Republican Senators questioned the experience of Christy Goldsmith Romero to lead the Federal Deposit Insurance Corporation (FDIC) or fix its cultural issues, but did not seem poised to go all out to block her during a hearing on Thursday.
Goldsmith Romero rebutted their assertions, pledged to overhaul the FDIC, and said she would be “inclined” to solicit more feedback on contentious proposed bank capital hikes, in a potential win for banks that have been calling for a rethink.
An attorney and Democratic member of the Commodity Futures Trading Commission, Goldsmith Romero was nominated by President Biden to replace Martin Gruenberg, who is stepping down after a probe found widespread sexual harassment and other misconduct at the bank watchdog.
Beyond safeguarding deposits and supervising banks, some of which continue to struggle following last year’s bank failures, the FDIC is a key player in rule-writing efforts that would impose new guardrails on banks and their executives. Confirming Goldsmith Romero before the November presidential election could cement Democratic leadership at the agency for years.
The Senate Banking Committee’s top Republican Tim Scott during his opening statement said that she did not have the necessary bank supervision experience.
“You have little experience with bank supervision or prudential policymaking, let alone managing the world’s largest deposit insurer,” he told her.
Scott also cited what he said were whistleblower complaints about Goldsmith Romero’s own management when she oversaw a 2008 crisis bank bailout program, without providing details.
“I am concerned with your ability to lead a much-needed culture change,” he added.
In the 11 years she oversaw that “TARP” program, Goldsmith Romero said there was only one formal finding against the agency. During that time, she had regularly scrutinized banks’ finances, similar to the FDIC’s bank supervision process, she added. She also said she would remove FDIC staff found responsible for misconduct.
“I’d send a clear message that harassment and discrimination (and) retaliation will not be tolerated,” she said.
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, 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 director at Capital Alpha Partners, wrote in an email. “They won’t vote for her, but that’s not the same as going all out to stop her.”
STRONG ENDORSEMENT
While Scott took swings, the Committee’s Republicans did not go too hard on Goldsmith Romero.
Republican John Kennedy implied he expected she would be confirmed, warning of her promised pledge to clean up the agency: “We’re going to be watching … I’m going to ask you about progress.”
A strong endorsement from Democrat Mark Warner, an influential moderate, also suggested any Republican effort to create cracks in Democratic support would struggle.
Senators also questioned how Goldsmith Romero would handle the pending “Basel endgame” capital hikes which have been vigorously opposed by the industry and Republicans lawmakers.
She said she was “inclined” to “repropose” the rules, aligning herself with Federal Reserve Chair Jerome Powell, who said earlier this week regulators should seek more feedback, a process that would give banks a chance to push for more changes.
“Reproposal is always on the table when you get … that many negative comments,” Goldsmith Romero said.
That would be a significant change in FDIC policy, as Gruenberg vigorously opposes slowing the rule by reissuing the draft, Reuters has reported.
