by Mitch Kokai
Senior Political Analyst, John Locke Foundation
One of the features of the first year of the Biden administration has been the way that regulators are increasingly trespassing into territory more properly reserved for legislatures.
If it is true that Richard Cordray is going to be nominated to the Federal Reserve as vice chair for supervision, which is what current talk now suggests (his name is certainly under consideration), it could mean that another imperial regulator may well be on the way to being appointed. …
… Let’s also note that Elizabeth Warren is something of a fan.
What does the job entail (in theory)?
“The Fed’s vice chair for supervision, a role created in the aftermath of the 2007-09 financial crisis, serves as one of the nation’s top bank watchdogs and is responsible for ensuring the health of the nation’s largest lenders like JPMorgan Chase, Goldman Sachs and Citi. The official monitors banks’ balance sheets, capital reserves and broader systemic risks that could arise in the event of an economic downturn.”
That sounds sensible enough, but keep an eye on that phrase “systemic risk,” something that has come to mean rather more than it should, notably when it comes to climate issues. …
… [A]nother Republican senator, Louisiana’s John Kennedy, has described Cordray as being to the “left of Lenin.” Either way, the message is clear. If appointed, Cordray could not be relied upon to keep within the boundaries of what this job is meant to be. In a democracy, regulators should regulate, not legislate. In the Biden era, that cannot, sadly, be taken for granted, meaning that the legislators in the Senate would not be doing their jobs if they approved Cordray or, if he’s not chosen, any other nominee who might be tempted to use his or her power to advance an agenda that ought to be decided by the elected, not the selected.