Stalemate Over Fed Vice Chair Post Unlikely to Be Resolved

Federal Reserve Headquarters, Washington, D.C. Robert Dodge, courtesy of

Senate Democrats are pressuring Republicans to confirm Obama administration nominees. But in the case of one nomination, for the Federal Reserve Vice Chair of Supervision, it’s the administration that’s holding back.

Senate Banking Committee Chairman Richard Shelby (R-Ala.) has repeatedly said that he will not hold a hearing on other nominations before his panel — including for two other Fed board members, a top Treasury Department economic sanctions official, and several others — until the Obama administration nominates a vice chair. The White House has repeatedly declined to either nominate someone for the Fed’s top banking regulation position or comment on its reasons for not doing so.

“The Obama administration needs to obey the law of Dodd-Frank,” Shelby said in a recent interview, referring to a clause in the 2010 law that requires the president to nominate a Fed vice chair for banking supervision.

But Ohio Sen. Sherrod Brown, the Banking Committee’s ranking Democrat brushes that argument off. Brown, for one, doesn’t blame the White House for not nominating someone who stands no chance of confirmation. It’s a vicious cycle of non-confirmation that probably won’t end until a new president is in the White House.

“There’s a frustration from the White House that they’re not moving on anybody. To go through all this vetting, and then Shelby will just move the goalposts again,” Brown said in an interview Wednesday. “But he’s picking that narrow thing. That’s only the Fed. That’s not everything else. That’s not a reason not to confirm [Adam] Szubin, or the SEC, or the Ex-Im Bank. It’s just dug in,” he said, referring to other pending nominations before the committee.

Adam Szubin is the Obama administration’s nominee for Under Secretary for Terrorism and Financial Crimes at the Treasury Department. Brown also referred to two nominees for the Securities and Exchange Commission and a nominee for the board of the Export-Import Bank.

While the Banking Committee’s track record on nominations during this Congress has been historically inactive, the fight over nominations is part of a larger struggle between the Republican Senate majority and a Democratic administration in its final year. “[Majority Leader Mitch] McConnell’s not willing to move. They want the government to operate as badly as possible, because these people aren’t in the jobs they should be in,” Brown said.

Many conservative groups, most prominently Heritage Action, are urging Republicans to prevent the confirmation of any more Obama nominees. Even though appointments are a crucial way for any administration to make a lasting mark on government, the White House officials may have more important things to to deal with in their final months.

“In the eighth year of the Obama administration, the wind has just gone out of the sails. The White House has bigger fish to fry,” said Sarah Binder, an expert on Congress and the Federal Reserve at the Brookings Institution.

Still, the lack of a nomination for the vice chair position, combined with the puzzling radio silence from the White House, has allowed Republicans to play offense on the issue. Over the summer, both Shelby and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said they will require Fed Chair Janet Yellen to testify on regulatory issues twice a year until the position is filled.

Previously, Fed Governor Daniel Tarullo, the de facto Fed point person for banking regulation, testified in lieu of the absent vice chair. Tarullo has come under fire from some Republicans for his role at the Fed, which often appears to match the job description for the vice chair of supervision, even though he has not been nominated or confirmed for that post. For example, many Republicans on the House Financial Services Committee have noted that Tarullo frequently attends meetings of the Financial Stability Oversight Council, even though he is not a formal member of the cross-agency panel.

For the foreseeable future, and likely for the rest of the Obama administration, it seems the two sides will acquiesce to a stalemate over the nomination.

“Neither side seems to have much of an advantage over the other. The White House appears to think that Tarullo is fulfilling the role. But on the other side you have the other nominees being held hostage in the Banking Committee,” Binder said. “Politically, it doesn’t make much sense for Republicans to confirm someone to that position.”

Morning Consult