Six Democratic senators want the Treasury Department’s independent watchdog to investigate whether the acting head of one of Wall Street’s key regulators is illegally hanging on to his job.
In May, the Treasury installed Keith Noreika as chief of the Office of the Comptroller of the Currency by making him a “special government employee.” While the status allowed the former bank lawyer to skirt Senate confirmation, the law governing his appointment limits his service in the role to 130 days.
In a letter planned to be sent Monday to Treasury Inspector General Eric Thorson, the lawmakers contend Noreika has worked a month longer than he should have. Noreika is “required to become a permanent federal employee or step down from his position,” wrote Senator Chris Van Hollen of Maryland and other Democrats on the Senate Banking Committee. The lawmakers who joined Van Hollen include Ohio’s Sherrod Brown, the banking panel’s top Democrat, and Elizabeth Warren of Massachusetts.
Noreika has previously drawn criticism from Democrats for sidestepping Senate vetting, as well as avoiding ethics requirements that other Trump administration appointees must follow. They’ve also complained that he embodies the revolving door between industry and government, pointing out that he was a private attorney representing financial firms one day and their overseer the next.
Following Guidelines
As OCC chief, Noreika has pledged to recuse himself from matters involving dozens of clients, including 14 banks that the agency oversees. He has said he is following all applicable ethics guidelines while he keeps the seat warm for President Donald Trump’s permanent nominee, Joseph Otting. Otting, who led OneWest Bank when Treasury Secretary Steven Mnuchin was its chairman, is awaiting Senate confirmation.
Despite his temporary status, Noreika has been active. He’s proposed rollbacks of regulations, clashed with the Consumer Financial Protection Bureau over its efforts to impose new constraints on banks and cast a deciding vote last month to free insurer American International Group Inc. from tough government oversight.
The Democratic senators want the Treasury’s Thorson to scrutinize the Financial Stability Oversight Council’s decision on AIG. While the OCC chief is a voting member of FSOC, the Democrats questioned whether Noreika had the authority to participate considering his status.
In their letter, the senators also called for the inspector general to investigate whether the Treasury has used the ”special designation” elsewhere, and if it has plans to use it again.
Loose Enforcement
The OCC has said Noreika’s appointment fully complies with the law. Though the lawmakers calculated Noreika hit his end date on Sept. 12, others have read the 130-day rule to refer to working days. That could put his deadline to step down into next month.
The 130-day limit hasn’t always been rigidly enforced by federal agencies that hire special government employees. But those workers typically hold less prominent roles than Noreika.
The OCC oversees national banks, making its leader one of the most powerful jobs among Washington financial regulators. While the Federal Reserve’s bank-supervision chief tends to draw more attention, the comptroller has power to approve Wall Street rules and enforcement actions alone, because the OCC isn’t run by a board or commission.
In addition to his role on the FSOC -- a panel of regulators created by the Dodd-Frank Act to head off threats to the financial system -- Noreika also has a seat on the five-member board of the Federal Deposit Insurance Corp.
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