Consumer watchdogs and progressive advocacy groups are responding with outrage to reports that President Joe Biden is expected to nominate former Treasury Department official Michael Barr to lead the Office of the Comptroller of the Currency, a move that would make a close ally of the financial technology industry the nation's top bank regulator.
A leading architect of the Dodd-Frank financial reform law implemented in the wake of the 2008 Wall Street collapse, Barr acted as the Obama administration's "willing destroyer of more progressive ideas" for bank regulation, The American Prospect's Alexander Sammon wrote Friday.
"Barr is deeply invested in the Wall Street and Silicon Valley corporations he would regulate, which should disqualify him from the outset."
—Bree Carlson, People's Action
"Barr tried to water down the Dodd-Frank Act at every turn, and became a vocal enemy of derivatives regulations, the very same financial instruments that caused the crisis to be so explosive," Sammon noted. "He opposed the Volcker Rule and carved out loopholes that would allow financial institutions to cash in via bailout again in the future."
That policy history—as well as his current ties to and investments in the financial technology industry—helps explain why fintech and cryptocurrency leaders rejoiced at news that Barr is the leading candidate to take charge at OCC. As Sammon reported, "Fintech luminaries, publications, and cryptocurrency mavens across the board are cheering the possible appointment of the person who should, in theory, be tasked with regulating them."
In a statement late Thursday, People's Action deputy director Bree Carlson argued that "it's hard to imagine a worse pick than Michael Barr."
"Barr is deeply invested in the Wall Street and Silicon Valley corporations he would regulate, which should disqualify him from the outset," said Carlson. "On top of that, in the wake of the 2008 financial crash, Barr helped lead the failed response to the crisis and bailed out banks instead of everyday people."
Vasudha Desikan, political director for the Action Center on Race and the Economy, told Politico that Barr would be "a terrible choice" and expressed hope that Biden listens to the vocal opposition from progressives.
"If this is a trial balloon, then hopefully it fails," said Desikan.
Barr ended up being a key architect of the HAMP program. Far from its stated goal of helping struggling mortgagees, as @ryanlcooper documents, the program ended up part of a plan to shift risk from the banks and government to the public.https://t.co/0U5l5FllDT
— Revolving Door Project (@revolvingdoorDC) January 21, 2021
Adding to progressive frustration with Biden's expected nomination is their view that a better-suited candidate, law professor Mehrsa Baradaran, is being bypassed for the job, even after incoming Banking Committee Chairman Sen. Sherrod Brown (D-Ohio) lobbied for her behind the scenes.
According to the Wall Street Journal, Biden's team considered Baradaran—an expert on the racial wealth gap and a leading advocate of postal banking—for the OCC post before landing on Barr as the frontrunner. If nominated and confirmed, Barr would be tasked with overseeing around two-thirds of the U.S. banking system.
"Our government needs leadership that fights for strong regulation against banks and financial institutions, not industry insiders who will just perpetuate the status quo."
—Vasudha Desikan, Action Center on Race and the Economy
"Black, Brown, and Native communities are often the first victims of predatory banking and financing," Desikan said in a statement Friday. "This is why we need a long-time advocate for racial and economic justice, like Mehrsa Baradaran, who understands this and can close the deepening racial wealth gap. Our government needs leadership that fights for strong regulation against banks and financial institutions, not industry insiders who will just perpetuate the status quo."
David Segal, executive director of advocacy group Demand Progress, warned that Barr's nomination would be "a major victory for Wall Street, and its child with Silicon Valley—the nascent FinTech industry."
"Joe Biden has asserted racial and economic justice as central pillars of his agenda," added Segal, "and the OCC provides a huge opportunity to pick a leader who is deeply committed to addressing the power of banks, and the inequities and systemic risks they've perpetuated."