Nine nominations at four financial regulators, including those implementing Dodd-Frank and the Volcker rule, are more likely to move forward following Senate Majority Leader Harry Reid’s use of the “nuclear option” to change the chamber’s rules. Executive branch nominations can now advance with a simple majority, rather than 60 votes, potentially speeding up rulemaking at agencies where nominees for top positions are awaiting confirmation.


Impact by Agency

– FHFA: Representative Mel Watt, a North Carolina House Democrat, was nominated to lead the Federal Housing Finance Agency. Watt’s nomination was blocked by Republicans in October. The agency is in charge of overseeing government-sponsored enterprises Fannie Mae and Freddie Mac.

– Treasury Department: Sarah Bloom Raskin was nominated as deputy Treasury secretary, where she would oversee tax reform, housing regulations, Dodd-Frank implementation and trade agreements.

How did the Volcker rule receive a major boost in the post “nuclear” Senate? Bloomberg Government’s Cady North analyzes in a new blog post.

– Four nominations at the Federal Reserve: Janet Yellen was nominated to replace Ben Bernanke as chairman of the Fed. Based on senators’ public statements, she appeared to have the backing of 60 senators before the rules were changed; that’s less of an issue now. Lael Brainard is a likely nominee to fill one of three vacant seats on the seven-member Fed Board of Governors. The Fed is working on the Volcker rule, Dodd-Frank rules for heightened prudential regulation of systemically important banks and non-banks, and margin requirements for uncleared swaps. Before the Senate’s rule change, the administration would have carefully paired nominees through the confirmation process — with one nominee acceptable to Republicans per pair — to avoid any one nominee being blocked. Under the new rule, the confirmation process probably won’t last as long.

– Three nominations at the Commodity Futures Trading Commission: Timothy Massad was nominated to replace outgoing chairman Gary Gensler. Christopher Giancarlo was named to replace Jill Sommers, and another individual must be named to replace Bart Chilton on the commission. Without action on nominations, the CFTC will have only one Democrat and one Republican starting next year and probably wouldn’t be able to approve new regulations. Prior to the Senate rule change, Debbie Stabenow, the chairwoman of the Senate Agriculture Committee, which has jurisdiction over CFTC nominations, said the panel wouldn’t take up nominations to the commission until 2014. Regardless of the rule change, the short December congressional schedule makes it unlikely the committee will move forward this year. The CFTC is working on rules and implementation processes related to derivatives and the Volcker rule under Dodd-Frank.

Impact on Volcker

Five agencies, including the Securities and Exchange Commission, CFTC, Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., are working to tease out enforcement matters on the Volcker rule. If all positions are filled, 23 individuals sitting on these commissions and boards have a say in the final rule. Without the Senate’s new rules, as many as six of these individuals could have been awaiting confirmation for an extended period of time, making it more difficult to approve this and other Dodd-Frank rules. Even so, if the CFTC doesn’t attempt to vote on the Volcker rule before Gary Gensler leaves the commission in January, a vote probably will be postponed until the first or second quarter of next year, after the positions are filled. Commission disagreement could affect the outcome if a vote is attempted before January.

What’s Next

The Senate may act soon to approve Watt’s nomination. On Oct. 31, the Senate voted 56-42 on whether to limit debate on his nomination, short of the 60 votes needed for the nomination to advance. Now that only a simple majority is needed, Watt’s confirmation now appears likely.

(Cady North is a Senior Finance Policy Analyst with Bloomberg Government.)

–Editors: Daniel Parks, Jodie Morris

To contact the analyst:
Cady North in Washington at +1-202-416-3414 or cnorth5@bloomberg.net

To contact the director of research:
Robert Litan at +1-202-416-3441 or rlitan2@bloomberg.net