As we’ve seen, ethics and avoiding conflicts of interest have become broadly optional under President Literal Manifestation of the Very Notion of the Conflict of Interest. But, as the ongoing effort to dismantle the worst U.S. government move since before the Civil War and Anthony Scaramucci’s six-month wait for a job show, even President Trump is not above all rules and regulations. And one that’s really gumming up the #MAGA works right now is the one that says those regulating banks can’t also own a bank. This is a fairly sensible rule, and one that Gary Cohn happily complied with and that Steve Mnuchin more or less complied with.
Selling off your huge stake in Goldman Sachs is one thing. Divesting your stake in a little mom-and-pop bank on East Main Street in West Springfield, America, is apparently another story. (Or, at least pretending that’s the issue so as not to be overly impolite to the president of the United States while also avoiding the taint likely to come with being associated with said president, and which sound more plausible than boilerplate about “focusing on my family.”)
Since President Donald Trump took office, at least three community banker candidates who had been recommended for the job either bowed out or declined to be considered over concerns about selling their stakes in their banks, according to people familiar with the matter….
Some bankers approached for the seat said it was difficult to leave the private sector for what is likely a lower-paying government job with term limits, said people familiar with the matter. These people also noted a concern about being a political appointee, and how that would be perceived when they eventually return to the private sector.
This is problematic for Team Trump, both because the law says someone on the Fed board should know something about community banking, and also they were really counting on that lovable, friendly community banking face to provide cover for their more objectionablepicks for the central bank.
Community bankers generally enjoy broad support on Capitol Hill. Packaging the nomination of a small-bank candidate with two other Fed nominees could make it easier for all three to win Senate approval, though the administration could choose to move ahead with two nominees.