On May 3, 2021, media outlets reported that Treasury Secretary Janet Yellen will appoint Michael Hsu to serve as Acting Comptroller of the Currency. Mr. Hsu currently serves as an Associate Director of the Division of Supervision and Regulation at the Board of Governors of the Federal Reserve System, where he heads the Large Institution Supervision Coordinating Committee (“LISCC”), which oversees the largest U.S. banking organizations.
Treasury Secretary Yellen’s authority to appoint an acting head of the Office of the Comptroller of the Currency (“OCC”) derives from the National Bank Act. Twelve U.S.C. § 4 permits the Treasury Secretary to appoint a First Deputy Comptroller, who, by operation of law, serves as acting Comptroller of the Currency during the absence or disability of the Comptroller. It was under this authority that then-Treasury Secretary Steven Mnuchin appointed first Brian Brooks and then Blake Paulson to serve as Acting Comptrollers in May 2020 and January 2021, respectively.
Mr. Hsu will be authorized to exercise all of the authorities of the Comptroller’s office, including directing the priorities of the OCC, while he serves as Acting Comptroller. As Brian Brooks’ tenure as Acting Comptroller demonstrates, an Acting Comptroller can significantly influence the organization’s policies. During Mr. Brooks’ tenure, the OCC encouraged cryptocurrency activities by national banks and federal savings associations (collectively, “banks”). For example, the OCC issued interpretive letters concluding that banks may provide cryptocurrency custody services for customers (see our blog post on this topic) and may hold the reserves used to back stablecoins held in hosted wallets. In addition, both during and after Mr. Brooks’ tenure, the OCC has granted preliminary conditional approvals for cryptocurrency firms to operate national trust companies.
The appointment of Mr. Hsu as Acting Comptroller also would affect the governance of the Federal Deposit Insurance Corporation (“FDIC”), which is managed by a Board of Directors. Under the Federal Deposit Insurance Act, the FDIC Board of Directors consists of the Comptroller of the Currency, the Director of the Consumer Financial Protection Bureau (“CFPB”), and three members appointed by the President and confirmed by the Senate. No more than three members of the FDIC Board of Directors may belong to the same political party. As Acting Comptroller, Mr. Hsu would serve on the FDIC Board of Directors alongside Chairman Jelena McWilliams, Director Marty Gruenberg, and Acting CFPB Director Dave Uejio.