Banks are pleased with President Trump's selection of House Republican staffer James Clinger to oversee banks, seeing him as a "pro's pro" and experienced policy hand. The pick could also excite conservatives seeking to limit the government's ability to rescue banks.
Clinger, previously counsel for the Republican-led House Financial Services Committee, was officially nominated Monday night to chair the Federal Deposit Insurance Corporation, the agency charged with administering the system of insurance for bank deposits and overseeing banks.
Clinger, the son of a former Republican congressman, doesn't have much of a public profile. But lobbyists and former staffers describe him as a deeply experienced staffer who has worked on every major piece of financial legislation over the past two decades, serving under four Republican heads of the Financial Services Committee.
And when it comes to carrying out one of the FDIC's major new responsibilities, namely leading the government mechanism for taking over and safely liquidating a failing megabank, one former co-staffer described Clinger as the perfect candidate.
The 2010 Dodd-Frank reform law empowered the government to appoint the FDIC to carry out the liquidation of teetering bank under what is known as Orderly Liquidation Authority, a process that also can include an infusion of Treasury funds to temporarily prevent a collapse.
The government didn't have that power in the financial crisis, when the disorderly collapse of big financial firms such as the investment bank Lehman Bros. threatened the economy. Granting it has proved controversial.
In April, Trump signed a memo requiring a Treasury review of orderly liquidation authority to determine whether it might hurt the economy. Congressional Republicans have argued that it amounts to a promise to bail out failing megabanks, and have sought to repeal it, including in a legislative package the House of Representatives passed this month authored by Jeb Hensarling, the committee's conservative chairman.
Peter Haller, a former committee staffer with Clinger, said that Clinger is "such a talented strategist that he will find the path to minimize government bailouts and achieve the FDIC's mandate without burdening the taxpayer."
While conservatives concerned about the possibility of bailouts have criticized the creation of the government mechanism for taking over failing big banks, Wall Street favors keeping it in place. The ClearingHouse, for example, a trade group that represents big banks, has opposed GOP measures to repeal the authority.
For his part, Hensarling praised Trump's selection of Clinger, calling his former chief counsel "incredibly smart and a man of the highest integrity" in a statement provided to the Washington Examiner.
Nevertheless, one industry source suggested that Clinger shouldn't be seen as necessarily tied to Hensarling's brand of conservatism. Clinger has worked with four GOP chairmen of the Financial Services Committee, the source noted, spanning the spectrum of Republican ideology: Hensarling, Spencer Bachus of Alabama, Mike Oxley of Ohio, and Jim Leach of Iowa. "He's been viewed by Republicans and Democrats as being a pro's pro," the lobbyist said.
Having served in that role for so long, Clinger has a comprehensive knowledge of financial services, said Larry Lavender, the director of government relations for Jones Walker and a former committee staffer who worked closely with Clinger.
"For virtually every financial services regulatory enactment, he was there as it was being done," Lavender said.
The list of major legislative efforts for which Clinger was present includes not just Dodd-Frank, the regulatory overhaul pushed through by President Obama and Democrats, but also the 2008 TARP bailout of banks, and the Sarbanes-Oxley Act of 2002 that reformed accounting standards.
Lobbyists also credited Clinger with playing a role in passing the 2012 JOBS Act, which allowed for the possibility for companies to raise capital through crowdfunding, and eased other securities regulations. The legislation was one of the few major bipartisan financial bill enacted in the Obama years.
In short, he would be a regulator that bankers believe they could work with as they attempt to win regulatory relief and shift the focus of regulation away from cracking down on banks and toward encouraging economic growth.
"I have known Jim Clinger for many years. After his years of experience on Capitol Hill and at the Justice Department, he is deeply versed in all aspects of banking regulation," said Rob Nichols, head of the American Bankers Association. "If confirmed, we look forward to working with him at the FDIC."