One of the country’s top banking regulators is one giant step closer to having a banker leading it.
The Trump administration officially confirmed the rumors on Monday evening, announcing that President Donald Trump intends to nominate Joseph Otting to serve as the next Comptroller of the Currency.
Otting served as the CEO of OneWest Bank from 2010 until 2015, working alongside Steven Mnuchin, the recently installed Secretary of the Department of the Treasury and the bank's former chairman.
If confirmed, Otting would replace Thomas Curry, who recently stepped down from the leadership position at the Office of the Comptroller of the Currency.
In the interim, Keith Noreika serves as acting comptroller of the currency. He was previously a partner at Simpson Thacher & Bartlett LLP and a partner at Covington & Burling, specializing in banking regulation.
As the official statement from the White House notes, Otting would bring firsthand experience in banking to the OCC.
Recently, Otting served as managing partner of Ocean Blvd LLC and Lake Blvd LLC. Otting previously served as president and CEO of OneWest and as vice chairman of U.S. Bancorp.
Earlier reports noted that Otting was fired by OneWest when the bank merged with the CIT Group in 2015.
Despite Otting no longer being with OneWest, it’s likely that Senate Democrats will try to hold OneWest’s foreclosure practices against him, as was the case with Mnuchin.
Democrats frequently criticized Mnuchin during his confirmation process over OneWest’s lending and servicing activities, taking to calling Mnuchin the “foreclosure king” in reference to OneWest’s supposed proclivity to foreclose on borrowers.
Senate Democrats tried to have some of OneWest’s supposed foreclosure victims to testify before the Senate Finance Committee, but the committee’s Republican leadership did not allow that testimony to happen.
Then, Democrats tried to push back against Mnuchin during his confirmation hearing over his time at OneWest. After Mnuchin’s confirmation hearing, Democrats took their fight against Mnuchin a step further by boycotting the committee’s vote, but the Republicans on the committee overrode that.
Despite the Democrats’ efforts, the Senate confirmed Mnuchin in a partisan vote of 53-47.
It’s possible that Democrats could also try to use the recent $89 million settlement between Financial Freedom, a reverse mortgage servicer owned by OneWest, and the Department of Justice against Otting as well.
The settlement covers Financial Freedom’s recovery of mortgage insurance payments from the Federal Housing Administration that the company was allegedly not entitled to during the time period between 2011 and 2016.
During much of that time, Otting was CEO of OneWest.
According to the DOJ, Financial Freedom tried to obtain insurance payments for interest from the FHA despite “failing to properly disclose on the insurance claim forms it filed with the agency that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to HUD, and pursuit of foreclosure proceedings.”
Whether Otting will join Mnuchin in receiving an unwarm welcome from Senate Democrats is yet to be determined, but odds are that Otting will be defending OneWest’s business practices before the Senate, just as Mnuchin did.
