Biden taps CFTC commissioner Goldsmith Romero to lead scandal-hit FDIC

The FDIC chief succumbed to pressure from lawmakers who said the bank regulator needed fresh leadership after an investigation found widespread sexual harassment and other misconduct at the agency.

Goldsmith Romero, 53, has a background in enforcement and has led major actions against Wall Street banks and other financial firms during her career. She joined the CFTC in March 2022 after a decade investigating financial crime and fraud as the watchdog of a key 2009 financial crisis bailout program.

The White House also said it plans to nominate Kristin Johnson, also a Democratic CFTC Commissioner, to be the Treasury Department’s assistant secretary for financial institutions, a key role after three banks failed in 2023.

Reuters reported on Wednesday their nominations were imminent, as the Biden administration pushes for first nomination hearings the week of July 8.

During Goldsmith Romero’s tenure as Special Inspector General for the Troubled Asset Relief Program (SIGTARP) from 2012 to 2022, her office brought cases and cooperated in federal enforcement actions against major corporations, including Goldman Sachs, Morgan Stanley and General Motors .

Goldsmith Romero also received awards from the US Attorney General and Department of Justice’s Criminal Division after her office uncovered a multibillion-dollar fraud, leading to jail terms for former executives at the former mortgage lender Taylor, Bean & Whitaker and the failed Colonial Bank.

In progressive circles, she is seen as a strong fit for the FDIC role and as having the management experience and skill set necessary to help fix the agency’s “toxic” environment, as the investigation described the FDIC, and address other challenges.

The FDIC is also grappling with the fallout of last year’s bank failures, which exposed supervisory weaknesses at the regulator, and is trying to finalize a handful of contentious new rules for Wall Street banks, including major capital hikes.

Goldsmith Romero’s nomination, a process that usually takes months, comes at a precarious time politically, just five months ahead of the November general election.

A number of Senate Democrats are up for re-election in narrow races, including Sherrod Brown who chairs the Banking Committee that must advance the FDIC nominee, making a potentially contentious confirmation process difficult to navigate. Democrats narrowly control the Senate.

“Getting a nominee through the Senate in the summer of a presidential election year is always an uphill battle, but the toxic politics and compressed timing make this forthcoming nomination a sprint up Mount Everest,” said Tyler Gellasch, CEO of Healthy Markets Association in Washington, a non profit focused on financial markets.

GUILTY ADMISSIONS

As a CFTC commissioner, Goldsmith Romero has advocated for stronger policing of US markets and stiffer penalties for misconduct.

Most notably, she has pushed for the agency to secure more admissions of wrongdoing from companies when settling enforcement actions, particularly from repeat offenders.

“We’ve seen Wall Street banks get one enforcement action after another … so I’m looking for a greater deterrent impact,” she told Reuters in a 2022 interview.

That campaign was evidenced by a recent CFTC settlement with JPMorgan Chase, in which the bank admitted it broke the agency’s rules.

She has also led the agency’s efforts to better understand the potential impact of artificial intelligence on financial markets.

Prior to being appointed SIGTARP, Goldsmith Romero was counsel to then U.S. Securities and Exchange Commission chairs Mary Schapiro and Christopher Cox and had investigated securities law violations.

She started her career as a law clerk at the U.S. Bankruptcy Court in Nevada after graduating from Brigham Young University Law School in 1995.

The White House also said Biden intends to nominate Caroline Crenshaw to another term as commissioner at the Securities and Exchange Commission and Gordon Ito to be a member of the Financial Stability Oversight Council.