Trump nominates Dodd-Frank opponent to police Wall Street

Barney Jopson
Pedestrians walk along Wall Street near the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

Donald Trump has taken a big step towards loosening the shackles on Wall Street by nominating a Capitol Hill aide involved in efforts to rip up the Dodd-Frank act as one of the US's most powerful bank regulators.

Jim Clinger, a former aide to conservative lawmaker Jeb Hensarling, was nominated by the president to chair the Federal Deposit Insurance Corporation, a regulator whose tasks include winding down failing banks.

Mr Clinger was named as Wall Street banks lower their expectations for an overhaul of Dodd-Frank in Congress and pin their hopes instead on Trump-appointed regulators watering down rules within existing law.

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Highlighting the importance of appointees, Gary Cohn, the former Goldman Sachs president who now heads the White House's economic council, said earlier this year: "Personnel is policy."

The FDIC has co-written multiple rules with the Federal Reserve and other regulators to put Dodd-Frank into effect. It played a central role in the Volcker rule ban on banks gambling with their own capital, which is loathed on Wall Street.

Mr Clinger's nomination was greeted with delight by bank lobbyists, who praised the extensive experience of an understated "technician" who started work on Capitol Hill in 1995. Advocates of tougher regulation greeted the news with glum resignation.

Until earlier this year Mr Clinger was chief counsel for the House of Representatives financial services committee, serving its Republican chairman Mr Hensarling, who regularly attacks Dodd-Frank's "growth-strangling regulations".

Earlier this month the House passed a Hensarling bill that would abolish Dodd-Frank, enabling banks to escape a number of regulations by agreeing to hold more capital. The bill, however, is expected to die in the Senate.

Mr Hensarling said: "Jim Clinger is incredibly smart and a man of the highest integrity . . . President Trump made a great decision in nominating Jim for this important position."

The Trump administration has appeared sheepish about its efforts towards deregulating banks, as Democrats accuse it of pursuing an agenda contrary to the president's campaign pledge to help "forgotten" Americans.

The White House announced Mr Clinger's appointment on Friday evening at a time when it was guaranteed to get little attention. The vote on Mr Hensarling's bill was scheduled for the day when Washington was distracted by the testimony of fired Federal Bureau of Investigation director James Comey. Last week the Treasury department unveiled 147 pages of recommendations for deregulation with no fanfare and no press events.

Dennis Kelleher, head of Better Markets, a pro-regulation advocacy group, said: "It is a deliberate strategy to roll out nominees and roll back regulation at a time when it will get the least attention so Main Street doesn't know that Washington is once again working for Wall Street."

Last week's Treasury recommendations do not carry any legal authority over the US's notionally independent financial regulators, but they are expected to serve as guidelines for Trump appointees to follow.

People who know Mr Clinger on Capitol Hill describe him as an "institution" who served several different Republicans on the financial services committee and could be relied on to do whatever was asked of him. Mr Clinger has left little record of his own views on financial regulation in speeches and writings.

"You don't serve on Hensarling's staff unless you fully embrace his agenda," said Mr Kelleher. "He's just the latest nominee who will come in to deregulate Wall Street . . . This is Christmas in June for Wall Street CEOs."

If confirmed by the Senate, Mr Clinger would begin his term as FDIC chairman at the end of November 2017, replacing the Obama appointee Martin Gruenberg.

Rob Nichols, head of the American Bankers Association, a lobby group, praised Mr Clinger, who he has known for nearly two decades, as someone "deeply versed in all issues surrounding financial regulation".