Outgoing U.S. President Donald Trump has nominated Acting Comptroller of the Currency Brian Brooks, an advocate for crypto-friendly reforms, to lead the national bank regulator on a permanent basis.
Brooks, a former bank executive who joined the Office of the Comptroller of the Currency in March after a stint as general counsel at Coinbase, has headed the federal agency since May. One of his first actions at the agency was to propose a federal licensing regime for fintech startups, which would spare them from obtaining state-by-state money transmitter licenses that all crypto exchanges currently need to do business.
Since being named Acting Comptroller by Treasury Secretary Steven Mnuchin, Brooks has made a number of moves to integrate crypto with the historically gun-shy banking sector. In July, his office published a letter telling nationally-regulated banks they could offer crypto custody services, while announcing in September that these same banks can provide services to stablecoin issuers.
Brooks has been serving as Acting Comptroller after his predecessor, Joseph Otting, announced his decision to step down in early May. The U.S. Senate Banking Committee oversees the OCC, and will likely hold a confirmation hearing before the entire Senate votes to confirm or reject Brooks’ nomination.
This means that timing could be a deciding factor. Trump lost November’s election to Democratic challenger Joe Biden, meaning Biden can nominate someone else to the position if Brooks isn’t confirmed before Jan. 20, 2021.
Moreover, the Senate Banking Committee is losing a Republican member in Senator Martha McSally, who lost her seat to former astronaut Mark Kelly in a special election. Senator Kelly is expected to take the seat shortly after Thanksgiving (every other Senator-elect will be sworn in next year).
It’s unclear whether the Democratic Senators on the committee would vote for Brooks. He has received criticism from Democratic Representatives for his focus on crypto, with several members of the House Financial Services Committee asking him a series of questions about his work on crypto and arguing he should spend more time addressing financial inclusion and minority banking issues, especially given the ongoing pandemic.
In addition, the Democrats in the Senate may wish to let President-elect Biden name his own choice to the OCC to serve a five-year term, rather than let Trump confirm another regulator.
Brooks’ nomination comes on the same day a vote to confirm Federal Reserve Board of Governors nominee Judy Shelton failed. The former Trump adviser has been a controversial pick, with three Republican senators saying they would vote against her, citing concerns about her views on the gold standard and the independence of the Fed board. A new vote is expected to occur at a later date.
In a statement, Brooks said it was “a great honor” to be nominated, adding:
It is a great honor to have President Donald J. Trump announce his intent to nominate me to serve our nation as the 32nd Comptroller of the Currency.
The mission of the Comptroller of the Currency benefits each American by ensuring our national banks and federal savings associations operate in a safe, sound, and fair manner. The OCC aims to promote fair access to capital and credit for the hundreds of millions of customers the federal banking system serves. We strive to make sure banks remain capable of providing the financial services that businesses and communities depend on to conduct their important activities each day. The more than 3,500 men and women of the OCC tirelessly work to keep the U.S. banking system the most respected in the world and a powerful source of strength for our economy and the nation.
As Acting Comptroller of the Currency, I am proud to contribute to this 157-year-old mission. If confirmed, I will work ceaselessly to ensure the agency continues to fulfill its critical mission and the men and women of this agency have the resources, training, and leadership they need to succeed in their duties.
A tall order
The hurdles to confirmation appear to be high for Brooks.
For starters, the Senate is in a lame-duck session, the Banking Committee would need to schedule a hearing and hold a vote, and Congress is about to go on Thanksgiving break, not to return until December. When lawmakers do reconvene, a Republican member (Martha McSally) will be replaced by her Democratic successor (Mark Kelly), shifting the balance of power on the committee.
While the confirmation of Supreme Court Justice Amy Coney Barrett showed the Senate majority can push something through if they are committed, “Republicans have to really want it,” said a longtime analyst of financial policymaking, noting that Shelton’s nomination failed to advance.
Further, even if Brooks were confirmed, incoming President Biden could take the highly unusual but statutorily permitted step of firing the comptroller, which members his party would likely encourage if not insist upon. All he would be required to do is notify the Senate of the rationale for firing.
The nomination of Brooks “is a last-minute move to install someone at the OCC for five years,” said the Washington analyst, who requested anonymity because his employer does not want to be caught up in controversy. “The Democrats are likely to view it as a shady trick.”
UPDATE (Nov. 17, 23:20): Added background on hurdles facing nomination.