“The big-bank CEOs who read that list are probably somewhat concerned,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading. “Progressives absolutely won the day on this.”
Biden tapped about 500 people to work with government agencies, from the CIA to the United States Postal Service, and help shape the future of government policy and appointments.
‘He made a lot of enemies’
Perhaps top on Wall Street’s worry list is Gary Gensler, who will lead the team working with financial regulatory agencies including the Federal Reserve, SEC and FDIC. Gensler led the Commodity Futures Trading Commission from May 2009 to January 2014.
“Gary Gensler undoubtedly brings back some bad memories,” said Boltansky.
Although Gensler is a former Goldman Sachs banker, he is now viewed as a tough-on-Wall-Street ally of Warren.
“He made a lot of enemies in DC and the industry,” said Ed Mills, Washington policy analyst at Raymond James. “The fact he’s leading this is a signal to the Elizabeth Warren wing of the Democratic Party that they have a voice on financial regulatory picks.”
Biden taps vocal critic of big banks, private equity
Kelleher, who declined to comment, is not exactly from the Robert Rubin wing of the Democratic party. (Rubin, a former Goldman Sachs chairman, served as Treasury secretary under President Bill Clinton.)
“Once a private equity firm extracts the maximum amount of value, it then tries to flip it into the public markets so it can cash out on the near-carcass of a corporation,” Kelleher said.
Meanwhile, Biden has a separate team overseeing the transition of the Consumer Financial Protection Bureau, the agency that is a Warren brainchild of Warren.
“Leandra English has deep experience, not just on the issues, but on how the mechanics of the CFPB works,” said Compass Point’s Boltansky.
He noted that the Trump transition met some “bumps in the road” because the president tapped some people who didn’t have much experience in government.
No major overhaul is coming
Of course, it’s important to note that Biden has only named a transition team, not a full Cabinet. There is no guarantee his picks to lead major agencies will ultimately please Warren and the progressive wing of the party.
And even if Biden wanted to pick regulators who would be very tough on Wall Street, Republicans in the US Senate may have the votes to block those appointments. (Unless Democrats sweep the runoff races in Georgia, Republicans will retain control of the Senate.)
“Progressives are absolutely first on that invisible scoreboard between progressives and centrists,” Boltansky said.
But Boltansky noted that “we’re at a very different point in the evolution of financial regulation” than in 2009, when the Obama administration was taking over. Back then, during the Great Recession, it was clear that a major Wall Street overhaul was not just inevitable, but necessary. And it took years to implement the Dodd-Frank law of 2010.
Today, Wall Street is not viewed as the top priority, with the Biden administration likely to focus instead on the pandemic, inequality and the climate crisis. And the fact that banks have withstood the turmoil of the health crisis (so far at least) suggests Dodd-Frank worked to strengthen the system.
Is too-big-to-jail over?
“If you’re a bank that has a scandal, then you need to be worried,” said Mills, the Raymond James analyst.
Yet like other Democrats, Biden will have to balance that urge to root out Wall Street wrongdoing with the need to keep capital flowing.
“They need the economy to work to get reelected,” said Mills. “And you can’t have the economy work if the banking sector isn’t.”