While President Obama is the one who chooses nominees for key financial services policy posts, it is a Republican from Alabama, Sen. Richard Shelby, who appears to have a big say in whether a candidate is actually confirmed.
Shelby has already blocked nominations for the Federal Housing Finance Agency and Federal Reserve, and is leading the charge to hold up any Consumer Financial Protection Bureau nominee until structural changes are made to the agency.
Although in the minority, Shelby has effectively become the one who makes or breaks financial service nominations, thanks in part to his influence with fellow Republicans and his long tenure on the banking panel.
"In terms of nominations in general, he is going to be a pivotal player in making sure they move through Banking," said Mark Calabria, a former top aide to Shelby and a director of financial regulations studies at the Cato Institute. "He is going to have close to a veto role."
Shelby has already exercised that role. He has blocked the nomination of Peter Diamond, who won a Nobel Prize for economics last October, by declaring him unqualified to serve on the Federal Reserve.
The White House also withdrew its nomination in January of Joseph Smith to be director of the FHFA after Shelby called him a "lapdog" and a "tool" of the administration. Last week Shelby, along with 43 other Republican senators, announced they would not support any nominee for the CFPB unless structural changes are made.
Amy Friend, a managing director at Promontory Financial Group and the former chief counsel to the Senate Banking Committee, said the Smith and Diamond nominations prove Shelby's influence.
"Joe Smith seemed to be a moderate, middle-of-the-road nominee, and the fact that Sen. Shelby chose to stop that nomination made people sit up and take stock," Friend said. "Now people are naturally looking to see what Sen. Shelby's reaction will be, and it's not clear what criteria he'll use to judge any prospective nominee."
