WASHINGTON (Reuters) - The Trump administration on Wednesday took its first step in replacing Obama-era banking regulators, naming a veteran financial lawyer as interim head of the watchdog for federally chartered banks. Keith Noreika, a partner at law firm Simpson Thacher & Bartlett LLP, will be first deputy comptroller at the Office of the Comptroller of the Currency and will run the OCC on an interim basis when Comptroller Thomas Curry leaves on May 5, Treasury Secretary Steven Mnuchin said in a statement.  Former banker Joseph Otting, who worked with Mnuchin at Californian lender OneWest, is considered the lead contender to permanently replace Curry, several people familiar with the matter have said. That appointment requires Senate confirmation and analysts said they expected Noreika to be in charge for much of this year. U.S. President Donald Trump wants to overhaul regulation of the financial services system to make it easier for banks to lend and has asked Mnuchin to review the Dodd-Frank Wall Street reform law by June 3.  The OCC is one of several regulators that monitors the health of Wall Street banks but has a particularly influential role in scrutinizing lending practices. Under Curry, OCC bank examiners have clamped down on what they perceive as overly risky loans, particularly the type used to fund private equity buyouts. Curry used his position to warn banks when he thought they were talking on too much risk in loans to energy firms and property developers. “Curry did use the bully pulpit to warn banks against risky activity and I think you’re likely to see less of that going forward,” said Ian Katz, financial policy analyst at research firm Capital Alpha.  The appointment of Noreika and the expected nomination of Otting meant limits on how much banks can lend to highly indebted companies may be loosened in the future, said Jaret Seiberg, analyst at Cowen Washington Research Group. “This is the most bullish sign yet for the biggest banks that the Trump administration will pursue a traditional Republican approach of financial regulation rather than adopt a more populist tone that could include high leverage capital requirements,” Seiberg said. Trump’s plans to overhaul regulation are being held up by the government’s current lean crew of regulators. While the Senate voted on Tuesday to confirm attorney Jay Clayton to head the Securities and Exchange Commission, the OCC’s changing of the guard might not be so smooth. Democrats have criticized practices at OneWest, the lender created by Mnuchin after the 2008 housing crisis that foreclosed on 36,000 California families. Mnuchin hired Otting as chief executive of the bank in 2010 and he held that role until it was bought by CIT Group in 2014.  Noreika’s background as a lawyer who has advised banks on M&A, including Ant Financial’s acquisition of Moneygram, as well as on the Volcker Rule, which prohibits banks from making speculative bets, is also controversial. “It is disturbing that the President is rushing to replace Mr. Curry with an acting appointee who has clear conflicts of interest, and lacks any experience in running such an important agency,” Ohio Democrat Sherrod Brown, the ranking member of the Senate Banking Committee, said in a statement. Noreika’s appointment does not require Senate approval. Curry, a career regulator, was appointed by the Obama administration for a five-year term that expired last month and has since been serving under an extension.  While Curry took a tough line on risky lending, the agency did come under fire for its failure to tackle a sales practice abuse scandal at Wells Fargo & Co.  The OCC is also trying to establish itself as a regulator of online lenders and financial technology firms. State authorities have argued that is their job and are suing the OCC, arguing it lacks the legal authority to offer a banking charter for technology companies. There are also three vacant spots on the Federal Reserve Board, including the post of vice chair of supervision, which will play a key role in any overhaul of bank regulation. Earlier on Wednesday, Mnuchin told a conference of community bankers that Trump had signed off on a nominee to fill the vice chair role but did not name the person. Reuters had previously reported that Randal Quarles, who worked as under secretary for domestic finance at the Treasury under President George W. Bush, was a leading candidate. Mnuchin said the administration was also close to naming the two other Fed selections. 
Changes at helm of U.S. bank agency signal new Trump era