By Richard Bowen, a professor of accounting at the University of Texas at Dallas and a speaker on ethical breakdowns and the financial crisis. Bowen is a member of Bank Whistleblowers United for giving warnings to Citigroup’s board about extreme risks and potential losses to shareholders existing in its mortgage business. Originally published at LinkedIn
“The White House just used a brazen back door move to bypass the Senate”… read the headlines of a recent Vanity Fair article regarding the appointment of Keith A. Noreika as the Acting Comptroller of the Currency, which makes Mr. Norieka the administrator of the federal banking system and acting head of the Office of the Comptroller of the Currency (OCC). The OCC supervises more than 1,400 national banks and federal savings associations and about 50 federal branches and agencies of foreign banks in the United States; which comprises nearly two-thirds of the assets of the commercial banking system. A very strong and powerful position to hold.
Mr. Noreika, formerly with the prominent law firm of Simpson, Thatcher & Bartlett, LLP, where he advised a wide range of domestic and international financial institutions, will now be in charge of regulating the banks he once protected.
However, there are a couple of very interesting twists to this appointment. Not only is Mr. Noreika now regulating the banking industry heretofore he has defended and protected, his appointment is on an acting basis as a ”special government employee” at a position of 130 days. Because of the length of time and that it is designated as acting comptroller this appointment does not require a Senate confirmation.
Talk about loopholes! This loophole means he does not have to sign the President’s ethics pledge, which allows him fewer restrictions on lobbying when he returns to his former work at the law firm. And, here’s another loophole… apparently, government requirements to date mean an acting head of the federal agency has worked at that agency for 90 days. In Mr. Noreika’s case, he was made “first deputy” at the OCC which assured he would get the top position should it become available. Mr. Norieka worked at the agency only a few hours before former Comptroller of the Currency, Thomas was conveniently ousted and yes, the position became available!
I’m not making this up! Remember, President Trump promised his banking industry buddies that he would gut financial regulations. Well, he’s on that path for sure. Mr. Curry, as best he could, imposed tough rules and big fines for wrongdoing. So it appears that President Trump and his sidekick, Treasury Secretary Steven Mnuchin, ride again, gaining another ally in their continued push to undo financial regulations, following the revolving door pattern which exists in government and on Wall Street, where the industry sends key individuals to government; they serve in the Department of Justice, the Treasury, the Securities and Exchange Commission (SEC) knowing that their real reward is coming full circle – they come back home to Wall Street or serving Wall Street via the law firms which pander to them and reap huge financial rewards.
A spokesman for the Treasury Department, which houses the agency, said Mr. Noreika would face “the same strong ethics laws that apply to all officials serving in the O.C.C.,” including divesting certain assets that pose a conflict and recusal from “any specific matters involving his clients from over the past year.”
However, the NY Times article goes on to say that seven of the 11 Democrats on the Senate Banking Committee, including Chris Van Hollen of Maryland and Elizabeth Warren of Massachusetts, submitted a letter to Treasury Secretary Steven Mnuchin, raising concerns about Mr. Noreika’s client list and pressing for clarity on his recusal plans.
The letter, also questioning whether Mr. Mnuchin’s appointment of Mr. Noreika was “circumventing” the confirmation process and avoiding certain ethics requirements, called the episode an “apparent political power grab.” “You have chosen to replace the current head with an acting head who is unvetted, has obvious conflicts of interest, and lacks the experience to run an agency that employs almost 4,000 individuals and oversees over 2,000 national banks, both large and small,” they wrote.
In an interview with Bloomberg, Senator Chris Van Hollen, said: “Mr. Noreika is an unvetted attorney who lacks the experience to serve as an independent Wall Street watchdog”… “His work in the private sector creates an unprecedented series of conflicts of interest— further underscoring the need for anyone serving as comptroller to go through the Senate confirmation process.”
According to an analysis of government records by the New York Times in collaboration with ProPublica, it certainly appears that this administration is, in fact, filling its key positions with a small army of former lobbyists and corporate consultants whose intentions are to roll back government regulations at the agencies they once sought to influence. The Times continues with new details to our previous reporting on Trump’s weakening of ethics rules and former lobbyists working on regulations they opposed on behalf of private clients just months ago.
Even the federal government’s top ethics official, Walter Shaub, who runs the Office of Government Ethics and has tracked ethics waivers issued by the previous administration, is being kept in the dark. He told the Times, “There’s no transparency, and I have no idea how many waivers have been issued.”
As Marianne Jennings, J.D., Professor Emeritus at Arizona State University Ethical and Legal Studies, author of The Seven Signs of Ethical Collapse, has said, “people look for loopholes to get around rules and regulations, which while they may be legal, are not necessarily ethical.”
When the U.S. government starts looking for, or creating, loopholes, and I believe this has been steadily evidenced, we are on a dangerous slippery slope. This brazen back door maneuver does not bode well. I’ve predicted an eventual meltdown; I hope I’m proven wrong.