The Republican chair of the U.S. Federal Deposit Insurance Corporation (FDIC) said on Friday she will step down from her role effective Feb. 4, 2022, removing a key remaining obstacle to President Joe Biden’s ambitious banking reform agenda.
Jelena McWilliams, a holdover from the Trump administration who was appointed to the role in June 2018, had previously said she intended to serve out her full term, which was set to expire in mid-2023.
However, McWilliams is now outnumbered on the FDIC’s board – which must vote on key rule-makings – by Democrats, sparking a messy public fight in recent weeks over who should set the agency’s agenda.
The five-member FDIC board currently has three members appointed by Democrats: Consumer Financial Protection Bureau Director Rohit Chopra, FDIC board member Martin Gruenberg, and acting head of the Office of the Comptroller of the Currency (OCC) Michael Hsu. McWilliams is the lone Republican, with one other position vacant.
Gruenberg, who previously ran the agency under President Barack Obama, will serve as interim director.
McWilliams’ unexpected resignation will hand full control of the agency to Democrats, speeding up Biden’s banking reform agenda which in many instances must be jointly agreed by all three federal banking regulators – the FDIC, the OCC and the Federal Reserve.
Democrats are eager to take a tougher stance on banks, reverse breaks dished out by former President Donald Trump’s regulators, boost competition, and tackle thorny issues including community lending rules, climate change and cryptocurrencies.
All this should be easier with McWilliams out the way, analysts have said. Earlier this month she tried to block efforts by the board’s Democratic members to solicit public feedback on changes to bank merger rules, which Democrats want to toughen up.
“Chair McWilliams started a political fight she couldn’t win,” Dennis Kelleher, president of the Washington-based advocacy group Better Markets, wrote in a tweet on Friday.
McWilliams did not say why she was resigning and could not immediately be reached for comment on the public holiday.
“Throughout my tenure, the agency has focused on maintaining and instilling confidence in our banking system while at the same time promoting innovation, strengthening financial inclusion, improving transparency, and supporting community banks and minority depository institutions,” she said in a statement.
Analysts have previously suggested Gruenberg could be renominated to run the agency for another five-year term.
Other names floated by analysts and Washington insiders to replace McWilliams include Mehrsa Baradaran, a law professor, and Michael Barr, a professor at the University of Michigan Law School and former Obama administration Treasury official, both of whom had previously been seen as possibilities for the Comptroller role.