Senator Shelby says supports FDIC nominee

Reuters News
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Posted: Jun 14, 2011 5:04 PM
Senator Shelby says supports FDIC nominee

WASHINGTON (Reuters) - Richard Shelby, the lead Senate Republican on banking issues, said on Tuesday that he plans to support the White House's nominee to head the Federal Deposit Insurance Corp.

Shelby's support is key to getting any nominees confirmed for the many openings at financial regulatory agencies, which are currently implementing the 2010 Dodd-Frank financial oversight law.

In recent months, Shelby's opposition helped sink the nominations of Peter Diamond to be a governor of the Federal Reserve Board and Joseph Smith to be director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.

On June 10, Obama announced he would nominate Martin Gruenberg to replace Sheila Bair as head of the FDIC, one of the main U.S. banking regulators.

Bair is leaving the job on July 8.

Gruenberg is currently No. 2 on the FDIC board and before joining the agency in 2005 he was a longtime Democratic aide on the Senate Banking Committee.

"I believe he is a credible, honest man and I look forward to supporting him," Shelby told Reuters in an interview.

Shelby was a member of the Banking Committee when Gruenberg worked there before leaving for the FDIC, which insures individual accounts up to $250,000 and manages bank failures.

"I know Marty well," he said.

Shelby's support does not guarantee Gruenberg will be quickly confirmed but it removes a major roadblock.

The Dodd-Frank law has given the FDIC new powers, including the duty of liquidating and selling off large, failing financial firms.

Along with the Federal Reserve the FDIC is requiring large banks like Goldman Sachs, JP Morgan Chase and Citigroup to write "living wills" providing regulators with a roadmap of how to resolve them if they fail.

The FDIC will also play a key role in implementing new Basel III capital standards agreed to last year by international regulators.

Banks have complained the new capital standards go too far and will impede their ability to lend.

The fate of other bank regulatory openings is less clear.

Last month, 44 Republicans, including Shelby, said they would block any nominee to be director of the new Consumer Financial Protection Bureau unless legislation is enacted changing how it is structured, a move Democrats say is intended to weaken the watchdog.

Obama has yet to nominate anyone for that post but Democrats and consumer advocates are urging him to choose Harvard Law Professor Elizabeth Warren for the job.

Warren currently leading the effort to set up the bureau, which opens its doors on July 21, as an adviser to Obama and the Treasury Department.

The president also has yet to nominate anyone to lead the Office of the Comptroller of the Currency, which regulates national banks.

He is considering nominating Thomas Curry for the job, according to people familiar with the situation.

Curry is currently an FDIC board member and is a former Massachusetts state bank regulator.

(Reporting by Dave Clarke; Editing by Gary Hill)