You’ve seen the news about Trump’s pick for CFPB director. What’s the back story? Plus: scroll down to see Trump officials who reported—and then sold—holdings in Bitcoin. On tap tomorrow: Two nominees—Peter Feldman for the consumer product commission and Geoffrey Starks for the FCC—head to Capitol Hill. As always, thanks for reading, and thanks especially for the feedback. I appreciate all the tips, ideas and hearing what’s on your plate. I’m at email@example.com and 202-828-0315, or follow me on Twitter @cryanbarber.
More on Trump’s Consumer Bureau Nominee
Who’s Kathy Kraninger? That’s what many lawyers were asking over the weekend as news leaked out that the White House would nominate her to succeed White House budget director Mick Mulvaney, her current boss at the Office of Management and Budget, to lead the Consumer Financial Protection Bureau. Kraninger (left) is a program director at OMB and 2007 graduate of Georgetown Law Center. Politico reports that the Senate Banking Committee intends to push confirmation forward this summer.
The backstory: For months, it appeared that Mark McWatters, chairman of the National Credit Union Administration, was in line for the nomination. Questions emerged about whether he should have recused himself from a vote to rescind federal supervision of the insurance giant American International Group. And McWatters’s practice of telecommuting from his Dallas home, revealed by the Washington Post last month, only raised more eyebrows.
Enter Todd Zywicki. The George Mason University law professor, and critic of the CFPB, had been floated early as a possible pick to lead the agency under a Republican administration. But it was only after McWatters fell out that the White House brought in more candidates, including Zywicki, who emerged as a leading candidate—and was even asked to complete paperwork typically required in the buildup to a nomination, according to people familiar with the White House’s search.
Zywicki would have been criticized as a conservative firebrand in the confirmation process. But, between his extensive research and writings in the area of financial services, along with his experience as a top official at the Federal Trade Commission, he could not have been accused of having a lack of relevant experience.
That’s the early criticism of Kraninger, who has experience in budget and homeland security issues but not in financial policy. Senate Democrats this week were also demanding information from Kraninger about whether she played any role in helping implement the Trump administration’s “zero-tolerance” policy of separating families and children at the border.
Kraninger “will bring a fresh perspective and much-needed management experience to the BCFP, which has been plagued by excessive spending, dysfunctional operations, and politicized agendas,” a White House official said in a statement. Last week, Mulvaney told reporters that he “affirmatively stayed out of the process of identifying potential replacements, mostly because I wanted them to be able to sort of stand on their own when it comes to the confirmation.”
What’s next: Mulvaney’s term as acting director ends June 22, but he can remain at the helm until his successor is confirmed. For regulated industries, don’t expect much by way of changes at the CFPB. Bloomberg has more here on Kraninger’s nomination and the Los Angeles Times here.
U.S. Ethics Agency: Report Your Crypto Holdings
The U.S. Office of Government Ethics is telling executive agency officials and nominees they need to report their holdings in virtual currencies—at least those that are considered securities. The CFTC considers Bitcoin a commodity—and a Brooklyn federal judge in March said the agency has the power to police Bitcoin as a commodity. A new case in Boston also has teed up this issue, as Reuters recently reported.
“OGE recognizes that virtual currencies are experiencing a surge in use and access, and as a result, employees who hold virtual currencies are increasingly seeking guidance from their ethics officials concerning their financial disclosure reporting obligations,” the ethics advisory says. The Washington Post has more here.
>> Which Trump administration officials have—or had—crypto holdings?There’s no single database that we can find. But we identified at least two Trump administration officials—Brent McIntosh and Jessie Liu—as having reported holdings in Bitcoin. McIntosh, the general counsel to the U.S. Treasury Department, joined the agency from Sullivan & Cromwell. Liu, a former Morrison & Foersterpartner, is the U.S. attorney for the District of Columbia. McIntosh and Liu both then sold off their holdings last year. Read OGE’s guidance memo here. More cryptocurrency reading:
• The New York Department of Financial Services grants a cryptocurrency license to Square Inc. [New York Law Journal]
• ”The SEC’s increasing focus on virtual currencies and ICOs will likely bring more oversight, guidance and enforcement in the coming months.” [Bryan Cave Leighton Paisner]
Who Got the Work: Blockchain Lobbying, and Meet New Theranos CEO
➤➤ Theranos Inc. founder Elizabeth Holmes and former COO and president Ramesh “Sunny” Balwani were charged in San Francisco federal court for their roles in an alleged multimillion-dollar scheme to defraud investors, doctors and patients while boasting of revolutionary blood-testing technology. Holmes is represented by Kevin Downey of Williams & Connolly and San Francisco criminal defense attorney John Cline. Balwani is represented by Jeffrey Coopersmith, a partner at Davis Wright Tremaine. Meanwhile, here’s a snapshot of David Taylor, the Theranos general counsel and former Munger Tolles associate who just became the CEO of the troubled company.
➤➤ Kara Ward, counsel at Venable LLP in Washington who specializes in banking and financial services, will lobby for the New York-based trade association Blockchain Token Association, per a new U.S. Senate disclosure. The registration form said Ward’s advocacy will focus on “legislative and regulatory environment relating to the development of blockchain-related businesses and assets.” Ward’s other lobbying clients include S&P Global Inc., Annaly Capital Management Inc., and PIMCO, the investment management company.
➤➤ JPMorgan Chase & Co. agreed Monday to pay a $65 million penalty to resolve claims that it tried to manipulate a global benchmark for interest rates. The settlement, reached with the Commodity Futures Trading Commission, put JPMorgan in the ranks of several other banks who previously paid fines to resolve similar accusations. Sullivan & Cromwell partner Kenneth Raisler, head of the firm’s commodities, futures and derivatives practice, represented the bank. Read the settlement here. Bloomberg has more here and the WSJ here.
➤➤ A team from Ogilvy Government Relations will lobby for Wells Fargo on “policy issues impacting banking institutions.” The work falls to the bipartisan duo of Karissa Willhite, who served as U.S. Sen. Bob Menendez’s deputy chief of staff, and Dee Buchanan, a former chief of staff to the House Republican Conference. Perhaps more importantly for Wells Fargo’s purposes, Buchanan was previously a longtime aide to U.S. Rep. Jeb Hensarling, chairman of the House Financial Services Committee.
➤➤ Robert Heim of Meyers & Heim LLP is representing a former investment banker in a case, recently taken up by the U.S. Supreme Court, that could curtail the Securities and Exchange Commission’s ability to bring securities fraud cases. The SEC found that the former banker, Francis Lorenzo, committed fraud by sending misleading emails to stoke interest in a troubled company’s bond sale. His argument is a version of “just the messenger: Lorenzo argues he was just passing along information that was given to him. [Wall Street Journal]
Compliance Corner: Product Safety Board Nominee Heads to Hill
What I’m watching Wednesday in Washington: Peter Feldman, senior counsel to the U.S. Senate Commerce Committee, heads to the Hill for his confirmation hearing for a seat on the Consumer Product Safety Commission. Jones Day partner Dana Baiocco, who founded the firm’s Boston office, was confirmed in May to a seven-year commission seat.
Meanwhile… FCC nominee Geoffrey Starks also heads to Capitol Hill on Wednesday. The president nominated Starks this month to fill the seat being vacated by Democratic-appointee Mignon Clyburn. Starks, a former Williams & Connollyassociate, is currently serving as an assistant bureau chief in the FCC’s enforcement bureau.
Here are some other headlines that caught my eye:
➤➤ “A proposal to simplify a rule banning banks from proprietary trading, rather than making life easier for Wall Street, could ensnare billions of dollars’ worth of assets not currently caught by the regulation.” [Reuters]
➤➤ ‘Tis the season for pardons, and some of those closest to President Donald Trump are pushing for one to be given to the “junk bond king” himself: Michael Milken. He’s unsuccessfully tried for decades to have his securities fraud conviction reversed. In his corner, pushing for a pardon, are the Trump’s son-in-law and adviser, Jared Kushner, along with Treasury Secretary Steven Mnuchin—and the Mooch! [Bloomberg]
New Hires and Promotions
>> Proskauer Rose has hired Karen Garnett as a partner in the firm’s corporate department in the Washington office. Garnett joins the firm’s 28-lawyer Washington office from the SEC, where she was most recently associate director of the corporation finance division. She left the agency in February afternoon spending two decades in public service.
>> Christopher Green, co-leader of Ropes & Gray‘s global private equity and hedge fund SEC enforcement and litigation group, will become general counsel to Bain Capital in September. Green succeeds Sean Doherty, a former Ropes & Gray lawyer, who is retiring after 13 years at Bain. Based in Boston, Green will oversee Bain’s legal and compliance groups globally.
>> The White House picked Rodney Hood, corporate responsibility manager for JPMorgan Chase and Co., for a seat on the National Credit Union Administration. At JPMorgan, Hood manages national partnerships with organizations that serve community development, civil rights, and disability community. Hood formerly served at the credit union administration during the George W. Bush administration.
>> Software company Adobe Systems Inc. named Dana Rao as general counsel. Rao, who succeeds Mike Dillon, has served Adobe’s vice president and associate general counsel of intellectual property and litigation since April 2012.
Got a new move in the compliance and government affairs space? Shoot me a note at firstname.lastname@example.org. That’s all for this week! Thanks for reading. And please send me any feedback.