Critic of regulation likely to become next head of FDIC

US president Donald Trump’s nominee for the role of chair of the Federal Deposit Insurance Cooperation (FDIC) looks likely to receive confirmation from the US Senate in the coming weeks.

Jelena McWilliams, who currently serves as executive vice-president and chief legal officer at Fifth Third Bank, has been called before the US Senate as part of the appointment process.

During the Obama administration, she worked closely with two Republican senators who are noted critics of the tighter regulation of the US financial industry brought in by Democrats.

McWilliams received a favourable report from the Senate banking committee in February, with the committee voting 28:1 to confirm her; only Democratic senator Elizabeth Warren voted against.

“Her judgement will be an asset to the FDIC,” chair of the committee Mike Crapo said during the hearing. He worked closely with McWilliams when she was the committee’s chief counsel.

If successful, McWilliams will be Trump’s third appointment to a key regulatory role. He has already appointed Jerome Powell as chair of the Federal Reserve and Joseph Otting as comptroller of the currency.

The totality of my experiences has afforded me a 360-degree view of our financial system and the institutions that regulate it

Jelena McWilliams, Fifth Third Bank

Trump first nominated McWilliams for the post in November 2017, after James Clinger withdrew his nomination for the position. She has been asked to serve a six-year term on the board of the FDIC, five of which she will serve as chair.

The FDIC is charged with maintaining financial stability and public confidence through the insurance of deposits. It is also responsible for examining, supervising and resolving US financial institutions and managing receiverships.

“An American dream”

McWilliams was born in Serbia and moved to the US alone at the age of 18, with only $500 to her name.

“Appearing… as the nominee to lead a historic federal agency is nothing short of an American Dream,” she said during her selection hearing in January.

McWilliams received her undergraduate degree in political science from the University of California at Berkeley, going on to study law at the same university.

She worked at law firms Morrison & Foerster and Hogan Lovells before serving as an attorney at the Federal Reserve Board of Governors between 2007 and 2010.

Afterwards, McWilliams worked for six years as a legal counsel to two US Senate committees, firstly on small business and entrepreneurship, and then on the committee on banking, housing and urban affairs.

She worked closely with two successive chairmen of the latter committee, Republican senators Richard Shelby and Crapo. Both men are outspoken critics of the Dodd-Frank Act, which was passed by a Democratic majority in the Senate in 2010 and considerably tightened the regulation of US banks.

In January 2017, McWilliams left government to become executive vice-president and chief legal officer at Fifth Third Bank.

“The totality of my experiences has afforded me a 360-degree view of our financial system and the institutions that regulate it,” she said. “I am confident that I can effectively lead the FDIC in its mission to ensure the safety and soundness of insured depositories, while balancing consumer protection and the need for available credit to grow the economy.”

Sound banking system

Democratic senator Sherrod Brown has said McWilliams will fulfil a “critical role” in the US regulatory system if she is selected to take over from current chair, Martin Gruenberg, who took up the post permanently in 2012.

“[McWilliams] is inheriting a sound banking system, built on 10 years of prudent management,” Brown said during the February committee hearing. “I caution the next chair to not deviate from a path which has served our economy well.”

McWilliams will take over at a time when the current administration is attempting to roll back banking regulation.

In a report last year, the US treasury recommended reducing oversight of large financial institutions while providing more regulatory relief for smaller banks. It also proposed loosening new mortgage restrictions designed to prevent a repeat of the 2008 financial crisis.

Most of the work so far has focused on streamlining Dodd-Frank. William Dudley, president of the Federal Reserve Bank of New York, has agreed it might be time for post-crisis regulation to be reformed, but warned not to cut back regulation too far.

He suggested the regulatory burden for smaller banks could be lightened and the criteria for market-making in the Volcker rule made more permissive.