Mortgage Daily

Published On: January 8, 2017

WASHINGTON — A Senate committee on Thursday approved two of President Donald Trump’s choices for key financial regulatory posts, including one for the short-handed Federal Reserve Board, despite concerns from Democrats that the nominees were too close to the industry.

Investment fund manager Randal Quarles has been tapped to be the Fed’s vice chairman for supervision, a new position created after the financial crisis that has yet to be filled. His approval by the Senate Banking Committee by a 17-6 vote came a day after another Fed vice chairman, Stanley Fischer, announced he would be stepping down next month, leaving the seven-member central bank board with four vacancies.

The other nominee given the OK on Thursday was Joseph Otting, former chief executive of OneWest Bank in Pasadena, California, and an ally of Treasury Secretary Steven Mnuchin.

Democrats attacked Otting for what they said was OneWest’s aggressive foreclosure practices, and his nomination narrowly was approved 13-10.

Trump chose Otting to be the comptroller of the currency, a powerful regulator who oversees federally chartered banks. The Office of the Comptroller of the Currency, which is an independent bureau of the Treasury Department, was a pivotal player in the $185 million settlement last year with Wells Fargo & Co. involving its creation of unauthorized accounts.

Democrats had sharply questioned Quarles and Otting during their July confirmation hearing, expressing concerns they would not stand up for average Americans against major financial institutions.
“While I appreciate both nominees’ willingness to enter public service, I do not think either nominee is the person we want in these important roles at our financial watchdogs,” Sen. Sherrod Brown (D-Ohio) said before Thursday’s vote.

“We’ve made a lot of progress in the seven years since we passed Wall Street reform, and the last thing we need are people at the Federal Reserve and Office of the Comptroller of the Currency who are supposed to look out for our financial system, instead working to weaken or eliminate important safeguards,” Brown said, referring to the 2010 Dodd-Frank law that President Trump and congressional Republicans want to dismantle.

Otting came under fire from Democrats for the foreclosure practices at OneWest Bank, which he ran from 2010-15. Mnuchin was the bank’s chairman from 2009-15.

In 2011, a regulator that is now part of the OCC said in a regulatory order that OneWest had engaged in robo-signing, a practice in which workers signed mortgage- and foreclosure-related documents without reviewing them or verifying they were accurate.

At the confirmation hearing, Otting defended his tenure and said that OneWest employees worked to stop foreclosures. He noted that OneWest did not confirm or deny the allegations in the 2011 regulatory order.

On Thursday, all but one Democrat — Sen. Heidi Heitkamp of North Dakota — voted against Otting’s nomination.

“Instead of helping families recover from the financial crisis, as CEO of OneWest Bank, he contributed to the devastation,” Brown said of Otting before the vote.

Republicans supported both nominations. Committee Chairman Mike Crapo (R-Idaho) said Otting and Quarles “demonstrated a wealth of understanding and qualifications.”

Crapo said he hoped both nominees would be confirmed soon by the full Senate. Quarles’ nomination was a particular concern given Fischer’s resignation.

“This development highlights the need to quickly confirm Mr. Quarles so the seven-member board can maintain at least four members,” Crapo said.

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