Last month, Comptroller of the Currency Joseph Otting, announced that he would be stepping down from his post effective May 29. The former First Deputy Comptroller of the Currency, Brian Brooks, has taken his place in an acting capacity. Although he is now one of the country’s top banking regulators, Brooks – who only joined the Office of the Comptroller of the Currency (OCC) – remains a relatively unknown figure. Here is what we know (and more troublingly, what we don’t know) about the new acting Comptroller.
Helping the Financial Crisis’ True Victims: Banks
From 1994 to 2011, Brooks worked at the law firm O’Melveny & Myers. In a 2015 profile, Brooks explained how he helped his clients (i.e. banks) weather the financial crisis by coming up with a process to verify robo-signed documents and restart foreclosure processes. As Profile Magazine puts it, “Slowly but surely, Brook’s clients got through it and survived the crisis.” No mention, however, of the people who lost their homes.
Despite swallowing Brooks’ sugar-coated version of his life’s events hook, line and sinker, Profile fails to make Brooks come across as anything but monstrous. Other venues are no more successful; his biography for the Leadership Academy boasts of his “lead role in crafting the banking industry’s response to the 2010–2011 foreclosure crisis.”
Getting Closer to the Foreclosure Action: Brooks’ Time at OneWest
While at the law firm O’Melveny & Myers, Brooks represented the group of investors – including Steven Mnuchin and John Paulson – that purchased the failed bank, IndyMac, from the Federal Deposit Insurance Corporation (FDIC) in 2009. Whether it was his work for them specifically or his dedicated efforts to help banks escape the consequences of their actions generally, Brooks seems to have impressed the OneWest team.
In 2011, Brooks joined the still-young bank as its Vice Chairman. Brooks appears to have been brought on to help OneWest avoid scrutiny and consequences for its aggressive and often illegal foreclosure practices. Brooks “advised executive management and the board of directors on all key legal, risk, and strategic issues, developed and implemented strategies to manage litigation and government inquiries, and led the bank’s compliance with regulatory orders on mortgage servicing and foreclosures.”
By all accounts, Brooks did well by OneWest (if not by those who held mortgages with the bank). “David Dayen, an author and researcher on the foreclosure crisis, told Bloomberg BNA that the federal government’s response was weak for all banks involved in the foreclosure crisis, but that OneWest used numerous tactics to avoid scrutiny at the state and federal level.” In the end, the original investors more than doubled their money, taking away hundreds of millions of dollars while the bank was forced to pay just a few million dollars for its countless violations.
The former Comptroller of the Currency, Joseph Otting, was also a veteran of OneWest. Otting served as the bank’s CEO from 2010 to 2015. He used his position to undermine the Community Reinvestment Act, against which he had had a vendetta after OneWest’s merger with CIT Bank was almost halted thanks to housing rights groups’ complaints of OneWest’s racially discriminatory business practices.
Brooks Joins Fannie Mae
In 2014, Brooks left OneWest to become Fannie Mae’s General Counsel. In his first years, he did not appear to make waves. Starting from Trump’s election, however, he became an active and vocal proponent for housing finance reform, despite rules banning Fannie Mae or Freddie Mac from lobbying. “Brian Brooks, Fannie’s general counsel, has a specific goal, the people said: Build a groundswell among housing-finance stakeholders that the best outcome for Fannie and Freddie is for Trump and their regulator to release the companies from government control.”
And, as Bloomberg pointed out at the time, Brooks had some advantages in making that case. “Adding to the intrigue over Brooks: He might have the ear of Mnuchin, who would be a vital player in any plans the administration has for Fannie and Freddie. Before joining Fannie, Brooks was vice chairman at OneWest Bank, the bank Mnuchin founded during the foreclosure crisis.”
It should also be noted that Brooks’ advocacy stood to benefit other OneWest connections, including OneWest investor John Paulson. The plan Brooks was pushing “would likely keep Fannie and Freddie at the center of the U.S. mortgage market and could spur a payoff for firms such as Paulson & Co., Blackstone Group and Fairholme Funds that have bought millions of dollars of the companies’ stock.”
Brooks and Mnuchin, a Lasting Friendship
Brooks’ name surfaced multiple times for various positions in the Trump administration. In February of 2017, it was reported that he was under consideration for Director of the Consumer Financial Protection Bureau. Later that year, numerous outlets reported that Brooks would be nominated as the Deputy Secretary of the Treasury, a clear signal of Mnuchin’s trust in him. As Axios reported at the time, “Mnuchin, like President Trump, puts a high premium on loyalty when it comes to appointing senior aides” and “two sources say that Mnuchin wanted a loyalist in this key position.”
Brooks ultimately withdrew from consideration before being officially nominated. Many had predicted that his record at OneWest would present a roadblock to his confirmation. A stint as an “Acting Comptroller” is a way for Mnuchin and Trump to reward a loyalist without requiring the difficulty of the Constitution’s “Advice and Consent” requirement.
Brian Brooks, Crypto Bro
In 2018, Brooks left Fannie Mae to become the Chief Legal Officer at Coinbase, a cryptocurrency exchange. (Brooks didn’t stay away from Fannie for long, however, joining its board just a year after his departure.)
It is little wonder why Coinbase was interested in him; as cryptocurrencies have become more popular, talk of greater crypto-regulation has also increased, making figures with ties to key regulators (such as the Treasury Secretary and Comptroller of the Currency) a hot commodity.
At Coinbase, Brooks set to work shifting the narrative around cryptocurrencies. In a Forbes op-ed, he cautioned that “legislators and regulators tend to fall back on assumptions, heuristics, and biases that overstate risks, understate benefits, or in some cases simply miss both current and historical facts.” Elsewhere he “argued private corporations are best positioned to build a much-debated digital U.S. dollar, and that the government should stand back and let them, doing little, if anything, to regulate their underlying blockchains.”
A New Face and A New Deregulatory Push at the OCC
In March, Steven Mnuchin announced that he had chosen Brooks to fill the position of First Deputy Comptroller of the Currency and Chief Operating Officer (that role, conveniently, does not require Senate confirmation). But while Brooks has officially moved from the private to the public sector, his positions on crypto regulation seem not to have changed.
Since joining OCC, Brooks has been arguing forcefully that “crypto is banking for the 21st century” and that it therefore makes sense to license them at a national level. Critically, “this would give these startups an alternative to the state-level money transmitter licenses when building operations.” Many states impose stricter banking regulations that crypto companies want to avoid.
Brooks has also vowed to use his new role to push banks to conduct more business with crypto firms. “As crypto matures, there are increasingly many companies that have perfectly robust risk management systems and do have an ability to comply with those laws, and they shouldn’t have trouble finding bank relationships,” he said. “Again, one of my messages in my new role is going to be to remind my colleagues at the OCC that banks not only have the ability, they have an obligation to serve all lawful businesses. They shouldn’t be discriminating because something’s a new technology.”
One just has to look at Brooks’ Twitter to see how little effort he has made to draw the distinction between his past role and his current position. Brooks appears to have first created a Twitter account last summer, using the handle @BrianBrooksCB (for Coinbase). He kept this handle and all of his old tweets initially when he joined the OCC. At a Coindesk virtual conference on crypto policy this spring, Brooks, who attended and spoke in his capacity as a government official, advertised his Twitter handle @BrianBrooksCB on the screen.
Since then, he has changed his twitter handle to @BrianBrooksOCC, but retains all of his old tweets, almost all of which he published while at Coinbase. Since his twitter handle has changed, however, those tweets show that Brian Brooks, the senior OCC official, is amplifying Coinbase’s interests. Furthermore, his biography features no standard disclaimer that the views expressed are his own. Any passing onlooker could be forgiven for confusing it for an official government account, especially given that he used the platform to thank other financial regulatory officials, like Steven Mnuchin, after they congratulated him on nabbing OCC’s top spot.
The Consequential Information We Don’t Know
What we still don’t know is how much Brooks stands to benefit from his well-positioned advocacy. As the First Deputy Comptroller, Brooks was not required to submit his financial disclosures to the Office of Government Ethics, where they would be easily accessible to the public. Brooks’ documents can only be accessed via FOIA (a lengthy process, even when pandemic-induced teleworking doesn’t add additional delays). The Revolving Door Project has requested those documents and awaits a response.
Additionally, only if or until Brooks is officially nominated for the position will he be subject to an Office of Government Ethics-approved ethics agreement to address continued conflicts of interest. Given that only five months remain until the November election, it seems highly likely that Trump will leave Brooks to serve in an acting capacity for an extended period of time (and potentially for most of the remainder of his term if he loses this fall, as Brooks can stay for 210 days until there is a nominee, at which point he is eligible to serve a fresh 210 days under the Vacancies Act).
The public has a right to know what steps, if any, Brooks is taking to manage his extensive conflicts of interest, especially since he appears to be using his official position as a megaphone for the crypto industry’s interests. In an effort to obtain this information, the Revolving Door Project has submitted FOIA requests for any ethics waivers applying to Brooks, as well as any documents outlining commitments on his part to recuse from specific matters.