On January 3, 2017, Timothy G. Massad announced that he will step down as chairman of the Commodity Futures Trading Commission (“CFTC” or “Commission”) on Inauguration Day, January 20, 2017.  Chairman Massad’s announcement also notes that he will also step down as a Commissioner after a few weeks.

President Barack Obama nominated Chairman Massad to

On December 14, 2016, House Freedom Caucus Chairman Mark Meadows released a special report (the “Report”) detailing over 200 rules, regulations, and executive orders the Caucus recommends that President-Elect Donald Trump should examine, revoke, or issue in his first 100 days in office.

The report targets for repeal a diverse set of regulations finalized or proposed during the Obama Administration, including several that are important to the financial services industry. These include the fiduciary rule for investment advisers, the proposed arbitration rule for consumer financial institutions, and rules setting recovery plan guidelines for OCC-regulated banks. The vast majority of the targeted regulations can be nullified by Congress pursuant to the Congressional Review Act (“CRA”), which could fuel further speculation that House Republicans may push for an omnibus resolution to nullify many regulations at once.


Continue Reading House Freedom Caucus Takes Aim at Financial Regulations

Republican president-elect Donald J. Trump, with the support of a Republican controlled Senate and House of Representatives, promises to bring in a new era of limited government, rolling back legislation enacted under President Obama’s administration. This transition to a new administration will have a significant impact on each of the federal financial regulatory agencies, including the U.S. Securities and Exchange Commission (the “SEC”).

Continue Reading Post-Election Outlook for Financial Regulatory Agencies: U.S. Securities and Exchange Commission

The election of Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring change to the Federal Deposit Insurance Corporation (“FDIC”).  The transition at the FDIC should be gradual due to the structure of the agency’s board of directors.  The five-person board consists of three directors appointed by the President and confirmed by the Senate (the “independent directors”), and two directors who serve by virtue of their positions as heads of other agencies, the Comptroller of the Currency and the Director of the Consumer Financial Protection Bureau (“CFPB”).  One of the three independent directors is separately appointed by the President and confirmed by the Senate to serve as Chair, and another is separately appointed by the President and confirmed by the Senate to serve as Vice Chair.  In addition, one of the three independent directors must have State bank supervisory experience.  No more than three of the directors may be members of the same political party.

The Federal Deposit Insurance Act is silent as to whether, and for what reasons, the President may remove an independent director from the board before his or her term has expired, and no court has addressed these questions with respect to the FDIC.  However, courts have referred to other statutes that similarly provide a fixed term for a senior agency official but are silent on the President’s removal powers.  These courts have sometimes indicated that, based on the structure and mission of the organization as an agency that is meant to be “independent,” the President may only remove such an official for “good cause.”  See, e.g., SEC v. Blinder, Robinson & Co, 855 F. 2d 677 (10th Cir. 1988).


Continue Reading Post-Election Outlook for Financial Regulatory Agencies: Federal Deposit Insurance Corporation

The transition to a new administration with the election of Republican Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring substantial change to each of the federal financial regulatory agencies. Changes in leadership at those agencies will likely result in substantial changes in policy regarding regulations, compliance, enforcement, and transactions.  While these transitions will take place over different time frames depending on the agency, there is unique uncertainty regarding how quickly the transition will take place at the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) and what that transition will entail.

The uncertain situation at the CFPB results, in part, from the fact that the Bureau is a new agency that has not previously experienced a change in administration. Moreover, the Bureau has been a controversial agency from its inception and it currently faces substantial questions about the constitutionality of its single-Director structure,  threats of Congressional disapproval of its recent and planned regulations, and legislation designed to change its structure and funding.


Continue Reading Post-Election Outlook for Financial Regulatory Agencies: The Consumer Financial Protection Bureau

The transition to a new administration with the election of Republican Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring substantial change to each of the federal financial regulatory agencies.  Changes in leadership at the federal financial regulatory agencies will likely result in substantial changes in policy regarding regulation, compliance, enforcement, and transactions.  While these transitions will take place over different time frames depending on the agency, there will likely be new leaders and many new board members at all of the agencies within a year of the new President’s inauguration.

For the Office of the Comptroller of the Currency (“OCC”), a bureau within the Department of the Treasury, very significant transition changes could begin as early as Inauguration Day. The OCC is led by the Comptroller of the Currency (the “Comptroller”).  The Comptroller is appointed by the President with the advice and consent of the Senate, and holds office for a term of five years “unless sooner removed by the President, upon reasons communicated by him [the President] to the Senate.”  See 12 U.S.C. § 2. Courts have interpreted this appointment provision as making the Comptroller of the Currency removable at will by the President.  See PHH Corp. v. Consumer Financial Protection Bureau, No. 15-1177, slip op. at 33-34 n.6 (D.C. Cir., Oct. 11, 2016).
Continue Reading Post-Election Outlook for Financial Regulatory Agencies: Office of the Comptroller of the Currency

On the campaign trail, President-elect Trump said little about his plans for the Federal Trade Commission (“FTC” or “Commission”), but he has a unique opportunity to remake the FTC early in his term, because of an unusual number of Commissioner vacancies, one expired term, and his presidential prerogative to designate one Commissioner as the Chair.
Continue Reading Post-Election Outlook for Financial Regulatory Agencies: Federal Trade Commission

President-Elect Donald J. Trump has said little about his plans for money laundering and terrorist financing enforcement, or his plans for the agency responsible for many of the Federal government’s anti-money laundering (“AML”) initiatives, the Financial Crimes Enforcement Network (“FinCEN”).

FinCEN is a bureau within the Treasury Department and not a fully independent agency.  Its leadership and policy agenda will be shaped by three yet-to-be-announced Presidential appointments, each of them subject to Senate confirmation:

  • the Treasury Secretary, who selects FinCEN’s Director;
  • the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, who must approve all regulations issued by FinCEN; and
  • the General Counsel of the Treasury Department, who oversees FinCEN’s Chief Counsel.

[Note: FinCEN’s leadership structure and authorities are summarized here.]

The current Under Secretary, Adam J. Szubin, and the current Director of FinCEN, Jamal El-Hindi, are both career civil servants who hold acting rather than permanent appointments.  The current General Counsel of the Treasury Department, Priya Aiyar, is also an acting appointee.

While Mr. Szubin, Mr. El-Hindi and Ms. Aiyar have no fixed terms, replacing Mr. Szubin and Mr. El-Hindi, in particular, may not be a priority for the President-Elect’s transition team.  Mr. Szubin rose through the ranks in the Justice Department’s terrorist litigation task force before running the Office of Foreign Assets Control (“OFAC”).  And, like Mr. El-Hindi – a longtime FinCEN staffer with prior experience at both OFAC and the Treasury Department’s Office of General Counsel – he is well respected and without partisan baggage.

At the same time, however, both FinCEN and the Treasury Department’s Office of Terrorism and Financial Intelligence as a whole are responsible for areas of policy at the core of the President-Elect’s platform: terrorism and border security.  FinCEN was first created as a financial intelligence agency and, under the USA PATRIOT Act, it is a clearinghouse for law enforcement information requests related to the financing of terrorism, among other things.


Continue Reading Post-Election Outlook for Financial Regulatory Agencies: Financial Crimes Enforcement Network

The transition to a new administration with the election of Republican Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring change to each of the federal financial regulatory agencies.  Changes in leadership at the federal financial regulatory agencies will likely result in changes in policy regarding regulation, compliance, enforcement, and transactions.  While these transitions will take place over different time frames depending on the agency, there will likely be new leaders and many new board members at all of the agencies within a year of the new President’s inauguration.

For the Board of Governors of the Federal Reserve System (“Federal Reserve Board” or “Board), very significant transition changes could begin immediately, with others to come over time. The seven members of the Federal Reserve Board are nominated by the President and confirmed by the Senate.  Currently, the Board only has five members, so the new administration can nominate two members to fill existing vacancies, although the Board has operated with five members for extended periods.  There is no requirement to balance the Board between Republican and Democratic members.
Continue Reading Post-Election Outlook for Financial Regulatory Agencies: Board of Governors of the Federal Reserve System

On November 8, 2016, American voters elected Republican Donald J. Trump as President.  In addition, Republicans maintained control of the House of Representatives and the Senate.  As the campaign rhetoric fades into the background over the coming weeks and months, the business of transitioning to a new administration will begin in earnest.  The results of