March 8, 2017 / 11:53 PM / 5 months ago

White House’s cold shoulder slows economic agenda

Former U.S. Assistant Secretary for Financial Institutions, U.S. Department of the Treasury, David Nason speaks during the "TARP: A Look at What Happened From Inside the Treasury Department " panel at the 2009 Milken Institute Global Conference in Beverly Hills, California April 29, 2009.Phil McCarten (UNITED STATES BUSINESS POLITICS) - RTXEJWK

WASHINGTON (Reuters Breakingviews) - The White House’s cold shoulder could slow Donald Trump’s economic agenda. David Nason, chief executive of GE Energy Financial Service, has withdrawn from the running to be vice chair of supervision at the Federal Reserve, the company confirmed on Wednesday. Administration officials declined to offer support after critics noted his role at the Treasury Department in arranging bailouts of the 2008 crisis.

The head of regulatory policy at the Fed is a key post considering the administration’s desire to cut red tape on banks. The position has been open since it was created by the 2010 Dodd-Frank Act. Daniel Tarullo has been doing the job unofficially but he is stepping down from the Board of Governors in April.

Nason had the backing of Gary Cohn, the former Goldman Sachs president who heads Trump’s National Economic Council and has championed deregulation. But the White House has been focused on executive orders and other priorities, and the administration never publicly endorsed Nason. 

That silence left an opening for critics. Nason was one of Hank Paulson’s key lieutenants at Treasury during the crisis, and conservatives questioned his involvement in the Troubled Asset Relief Program. Financial-sector lobbyists who want a more radical dismantling of Dodd-Frank voiced their concerns to Senate Republicans, citing Nason’s past defense of the legislation. The White House repeatedly declined to comment even as reports of opposition surfaced in the media.

He is not the first nominee to be left hanging in the wind. The administration failed to strongly back Trump’s choice for Labor secretary, fast-food CEO Andy Puzder, after Democrats attacked his record of labor violations and worker abuses at Carl’s Jr. and Hardee’s. He withdrew his name in February. Another Goldmanite, Jim Donovan, is Treasury Secretary Steven Mnuchin’s pick for the No. 2 spot but the administration has again been silent amid questions about Donovan’s Wall Street ties. And Secretary of State Rex Tillerson still cuts a lonely figure at Foggy Bottom after administration officials nixed his favorite for deputy.

Nason’s withdrawal now leaves the White House scrambling after other potential candidates, like Congressman French Hill, declined to be considered for the Fed role. Given Nason’s treatment, others with the right qualifications may also think twice about joining the new regime.

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