The regulator of America’s biggest banks must keep many balls in the air. Soon it may have another. Financial inclusion advocate Mehrsa Baradaran is in the frame to run the Office of the Comptroller of the Currency, Bloomberg has reported. That suggests it could take up the fight against inequality that President Joe Biden is making a priority. Yet the agency is struggling with the duties it already has.
Baradaran, a law professor, has written extensively about how a lack of traditional bank services hurts low-income families and people of color. Regulators have a role to play on that score. The OCC and other bank cops are responsible for grading banks on services for poor and minority communities. And the OCC hasn’t always covered itself in glory: it changed the community-banking rules last year without getting buy-in from other regulators, causing much confusion.
But the OCC’s primary mission is already sprawling. It must ensure the safety and soundness of national banks, which involves almost 1,200 firms with $14 trillion in assets. The agency itself has almost 3,500 employees and an annual budget of about $1 billion. Its work includes identifying risk management lapses and bringing enforcement cases for wrongdoing. JPMorgan’s $6 billion trading loss in 2012, the so-called London Whale incident, shows what happens when it fails.
More recent mishaps have blotted its copybook too. Besides going it alone on the Community Reinvestment Act, it also rammed through a rule stopping big banks from eschewing clients who manufacture guns or drill oil. That’s now on hold for a new OCC boss to examine. Recent bank fines have also been opaque, punishing banks like Citigroup without revealing what they did wrong.
Baradaran is no novice. She has written about the limitations of stress tests and other regulatory topics that would be relevant to a bank regulator. But her focus is on closing racial wealth gaps, and that’s the reason progressives want to see her in Washington. By contrast, whoever takes over from acting Comptroller Blake Paulson will have their hands full making sure the OCC is functional and capable of keeping banks honest. A champion of fair finance would risk being the right person in the wrong place.