UPDATE: May 7, 2021: Michael Hsu will become acting comptroller of the currency Monday, the Treasury Department said Friday in a press release.
"It is a tremendous honor to serve as Acting Comptroller of the Currency alongside those who ensure our federal banking system operates in a safe, sound, and fair manner," Hsu said in the release. "I appreciate the confidence Secretary [Janet] Yellen has shown in me by appointing me to this important post. ... My focus as Acting Comptroller will be on solving urgent problems and addressing pressing issues until the 32nd Comptroller is confirmed.”
Blake Paulson, who has served since January as acting comptroller, will return to his role as the regulator's senior deputy comptroller and chief operating officer, the Treasury Department said.
“Everyone at the OCC congratulates Mike on becoming Acting Comptroller and welcomes him to our agency and mission,” Paulson said. “It has been a great honor to serve as Acting Comptroller of the Currency. I look forward to supporting Mike in his new role."
- Treasury Secretary Janet Yellen is expected to name Michael Hsu, the Federal Reserve’s associate director of bank supervision and regulation, to temporarily lead the Office of the Comptroller of the Currency (OCC), The Wall Street Journal reported Monday.
- Hsu’s appointment has been in the works for weeks, and he could start at the regulator this week, Politico reported Monday, citing anonymous sources.
- Acting Comptroller Blake Paulson has drawn the ire of Democratic lawmakers over his defense of the "true lender" rule, which allows fintechs or other nonbank lenders to offer loans at higher interest rates than the state in which they are licensed by partnering with a bank that is chartered in a state with a higher interest rate cap.
Hsu would be the third consecutive acting comptroller at an agency that hasn't had a permanent chief in 340 days — since former Comptroller Joseph Otting left office May 29, 2020.
The Biden administration has appeared in no rush to nominate an OCC leader. Former Ripple adviser and Treasury Department official Michael Barr had reportedly been favored to head the agency in January. But Barr’s candidacy drew pushback from some Democrats who said the former liaison for Obama-era Treasury Secretary Tim Geithner could have been tougher on banks when drafting certain regulations in the Dodd-Frank Act, Politico reported.
Since then, at least one person, former Fed Gov. Sarah Bloom Raskin, turned down an offer to run the OCC, The Wall Street Journal reported, citing people familiar with the matter. Some progressives have pushed the administration to nominate Mehrsa Baradaran, a law professor at the University of California, Irvine.
Yellen is expected to name Hsu as first deputy comptroller. He would then become acting comptroller after joining the OCC, The Wall Street Journal reported. Paulson would remain at the agency as a deputy comptroller and chief operating officer, according to the publication.
The OCC is couched within the Treasury Department, so Yellen has the authority to name an acting comptroller. Former Treasury Secretary Steven Mnuchin named Paulson acting comptroller Jan. 14, less than a week before leaving office.
Some advocates have faulted the Biden administration for leaving a Trump-era agency head in place — Paulson is a 36-year veteran of the OCC — rather than installing an ally who might prepare a policy vision for a Senate-confirmed comptroller to roll out soon after taking the helm.
The next head of the OCC is expected to have a full slate — potentially including revisiting controversial rules implemented or advocated by the last three comptrollers.
Paulson ruffled feathers last month, when he wrote lawmakers to counteract "misperceptions" surrounding the true lender rule and added that undoing it would have an "adverse impact."
Sen. Chris Van Hollen, D-MD, introduced a resolution in March to revoke the rule using the Congressional Review Act. Senate Banking Committee Chairman Sherrod Brown, D-OH, last week also called for the OCC to revoke the rule, saying it was "rushed through" by Paulson’s predecessor, former Acting Comptroller Brian Brooks.
Alysa James, a spokesperson for Brown's office, said it was "outrageous for the current Acting Comptroller to advocate on behalf of this harmful rule."
"His letter to Congress is highly irregular, inappropriate and contains misleading statements," she told Politico.
Beyond the true lender rule, the next OCC chief may be called on to address two regulations so controversial, the agency's top official resigned shortly after finalizing them. Brooks, on his last day in office, finalized the fair access rule, which would prohibit banks with more than $100 billion in assets from denying services to gun manufacturers, energy firms and operators of private prisons, among other lines of business. But the OCC paused publication of the rule to allow the next confirmed comptroller to review it — along with the more than 35,000 public comments the regulator received.
The OCC’s revamp of the Community Reinvestment Act, too, generated pushback when it was finalized in May 2020 — a week or so before Otting left office.
The first revision since 1995 to the anti-redlining rule creates new data collection requirements, evaluates banks based on areas where they have significant deposits rather than where their branches are, raises asset thresholds and adds a distinction between small and intermediate-sized banks. But it drew fire for not garnering support from fellow regulators — particularly the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) — and for being finalized just six weeks after the public comment period closed, leaving doubt as to how much feedback was actually considered.