Acting Comptroller of the Currency Keith A. Noreika hasn’t acted much like a mere placeholder in the interim job.
The former Simpson Thacher & Bartlett LLP partner has traded sharp barbs with Consumer Financial Protection Bureau Director Richard Cordray over the agency’s arbitration rule and also taken swipes at state regulators during a speech defending the idea of a special charter for fintechs.
Noreika also proposed sweeping changes to federal regulatory authority during a Senate appearance and has called for reconfiguring the Volcker Rule, which bars banks from certain types of proprietary trading.
“He has stood out and made a name for himself in being unusually outspoken in a short period of time,” Ian Katz, an analyst at Capital Alpha Partners, told Bloomberg BNA in an interview.
Noreika’s tenure could end soon: His presumptive successor Joseph Otting appeared before the Senate Banking Committee July 27 for a confirmation hearing, although no floor vote has yet been scheduled.
One former OCC official who temporarily led the agency says there’s nothing wrong with Noreika’s outspoken approach to his tenure, short as it may be.
“I felt that whether you’re an acting comptroller or a confirmed comptroller, you have the same responsibility to uphold the mission of the office and the laws that the OCC administers,” Julie L. Williams, twice an acting Comptroller of the Currency and now a managing director at Promontory Financial Group LLC in Washington, told Bloomberg BNA in an interview.
“If that means taking tough positions or being in a controversial spot because you are doing what you think is the best execution of the mission of the office, then that is your responsibility,” she said.
Noreika exchanged a series of reproachful letters with Cordray over that agency’s arbitration rule before ultimately passing on petitioning a group of federal regulators, the Financial Stability Oversight Council, to vote to nix it.
During a Senate committee appearance in June, he outlined a broad set of recommendations that would empower the OCC to have a greater role in regulating smaller banks. His written testimony was, notably, longer and more detailed than that of the other three federal financial regulators he sat beside.
Noreika advocated shifting small bank oversight to the OCC and away from the Federal Reserve and CFPB, as well as removing a requirement that the Federal Deposit Insurance Corporation give its own approval for those institutions to have insured deposits.
“Clearly he’s made this decision, at some point, that he wasn’t going to worry too much about ruffling feathers,” Katz said. “He was just going to speak his mind and let the chips fall where they may, and that’s what he’s done.”
His targets have been manifold, showing a willingness to take on all comers, even though in his public appearances he has been mild-mannered and judicious in tone.
In a July 19 speech, Noreika stood up for the OCC’s future role in granting bank charters for financial technology firms, a move that has been challenged in court by state bank overseers.
He separately indicated the agency could take targeted, unilateral action to address the Volcker Rule, a Dodd-Frank Act ban on proprietary trading adopted jointly by the OCC and four other financial regulators. He wants an “advance notice of proposed rulemaking,” allowing industry to publicly air specific grievances about the rule.
His Volcker talk is “a significant move in the sense that the OCC would be taking a step forward and beginning the dialogue, but it is also a limited move,” Clifford S. Stanford, an Atlanta lawyer who leads Alston & Bird LLP’s bank regulatory team, told Bloomberg BNA. “The OCC would have to go back with the other agencies jointly” if it wanted to change the actual rule, he said.
Critics of the administration are indeed feeling their feathers ruffled by Noreika, in part due to the process that led to his appointment.
He was first appointed as a “first deputy” at the OCC and then ascended to become the agency’s leader after President Donald Trump ousted the previous Comptroller, Thomas Curry.
The appointment leading to the acting role is “something that hasn’t been done in my experience in working with the OCC,” Williams said. “I can’t tell you it’s never been done, though. It’s not something that’s precluded by the statute.”
In the transition, Noreika never signed the Trump administration’s executive branch ethics pledge because he was deemed a “special government employee,” a status intended to cover temporary positions of 130 working days or less. He took office May 5, so the 130th day would fall in mid-November.
The move rankled Democratic lawmakers. “Trump has been willing to weaken the ethics rules and now he’s got someone heading up the OCC who says he doesn’t even have to follow the ethics rules at all,” Sen. Elizabeth Warren (D-Mass.) told reporters July 20. “That’s not draining the swamp, that’s opening the doors wide open and inviting the swamp creatures in.”
Noreika pushed back against Warren’s remarks. “She is wrong about the ethics rules that apply and my commitment to abide by all applicable ethics restrictions and to recuse myself from any matter where appropriate,” Noreika told Bloomberg BNA in an emailed statement.
Noreika has said he will recuse himself from any matter involving companies he previously worked with, an 80-firm list that includes banks like JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., and TD Ameritrade Holding Corp., as well as trade associations, other big law firms, unions, and asset managers.
He also said he divested assets that would create conflicts of interest and would, for a year after leaving the OCC, not lobby the agency on behalf of any clients.
“I am disappointed that Senator Warren did not raise her concerns with me directly when we met, and would now resort to name calling and fact-free attacks on my character,” Noreika added.
Before his tenure at Simpson Thacher, Noreika was a partner at Covington & Burling LLP in Washington, where he represented the American Bankers Association in a challenge to a California law that required giving consumers a chance to opt out of having their personal financial information shared by banks and other companies. The Ninth Circuit issued a 2008 split decision with mixed results for both sides.
Noreika isn’t the only acting head of a financial regulator in the Trump administration to take on an outsized role.
Securities and Exchange Commissioner Michael Piwowar took steps toward rolling back regulations and ordering review of agency rules after Chairman Mary Jo White stepped down in January.
Piwowar, though, was the temporary head of a multi-member commission, and the OCC has a single-director structure.
John G. Walsh was acting comptroller from August 2010 to April 2012, where he played a role in implementing Dodd-Frank mandates and fully took on the comptroller’s responsibilities.
Unlike Noreika, however, Walsh served for nearly a year before Curry’s nomination was even announced. “It’s an odd situation to be in,” Katz said, because Otting could be confirmed by the fall.
But the timing issues don’t faze Williams, who was acting comptroller in 1998 and again in 2004-05. “I think the acting is acting regardless,” she said. “You’re responsible. The buck stops with you until a new comptroller is sworn in, and you have to behave that way.”
(Twentieth paragraph corrected to reflect scope of 130-day timeline.)
To contact the reporter on this story: Rob Tricchinelli in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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