Trump Considering U.S. Bancorp's Davis for Fed Board Seat, Source Says

  • Davis is a contender for one of three central bank openings
  • CEO has led Minneapolis-based lender for more than a decade

Donald Trump is considering nominating U.S. Bancorp Chief Executive Officer Richard Davis for the Federal Reserve Board, said people familiar with the matter, as the president prepares to start reshaping the central bank’s approach to monetary policy and Wall Street oversight.

Davis, who has announced he plans to retire as chief of the Minneapolis-based bank later this year, is a contender to fill one of three openings on the seven-member Fed board, said people who asked not to be named because the process is still in flux. Next year, Trump will have even more opportunity to put his stamp on the world’s most powerful central bank when Janet Yellen’s term as chair expires.

Spokesmen for the White House and U.S. Bancorp declined to comment.

Davis, 58, has previously said he would stay on as executive chairman of U.S. Bancorp after he steps down as CEO in April. He has run the lender for more than a decade. It performed well through the financial crisis by concentrating on retail customers and managing money for corporations and governments. His avoidance of investment banking, proprietary trading and subprime mortgage lending helped the bank dodge the steep costs that plagued larger firms.

Less Regulation

Davis has said that Trump’s election victory could be good for business. At a November investor conference, he said he expected the new administration to pursue policies that would spur consumer demand, which would help U.S. banks. Davis added that lenders would benefit from less regulation, and eliminating rules is something that Trump has repeatedly pledged to do.

Trump is considering candidates as the Fed prepares for an active year. Central bankers have penciled in three rate hikes in 2017, and are starting to discuss how to wind down their $4.45 trillion balance sheet. The Fed has raised interest rates only twice since the financial crisis.

Trump hasn’t yet announced his plans to fill any of the vacancies at the Fed, including his pick for vice chairman of supervision, a high-profile job that handles regulation of the biggest Wall Street banks. While the role went unfilled during Barack Obama’s presidency, it was ostensibly done by Daniel Tarullo. Tarrullo, who helped implement many of the rules required under the 2010 Dodd-Frank Act, plans to step down from the Fed board in April.

Candidates for the supervision post include David Nason, who worked for the Treasury Department during the 2008 financial crisis and is now CEO of GE Energy Financial Services Inc., people familiar with the matter have said. Trump’s advisers have also met with bank executives including John Allison, the former CEO of BB&T Corp. as they prepare to fill Fed openings.

Republican Pressure

Yellen has been under increasing pressure from Republican lawmakers over bank regulation. House Financial Services Committee Chairman Jeb Hensarling and other Republicans on the panel sent Yellen a letter Thursday, urging her to halt any Fed work on rules until the Senate confirms Trump’s nominee for the supervision post.

One of the seats Trump must fill is set aside for someone with community banking experience. As CEO of a bank with $446 billion of assets, U.S. Bancorp’s Davis probably wouldn’t qualify for that role.

Trump’s advisers have also considered candidates with community banking experience, including U.S. Representative French Hill, an Arkansas Republican, people familiar with the matter have said.

— With assistance by Jesse Hamilton, Jennifer Surane, Craig Torres, and Justin Sink

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