Another Biden Financial Regulator Spins Through the Revolving Door

[Celerity]

Michael Hsu, former OCC head, has joined a VC firm backing crypto and fintech companies.

https://prospect.org/2025/12/18/another-biden-financial-regulator-revolving-door-michael-hsu/


Michael Hsu, then acting head at the Office of the Comptroller of the Currency, speaking at a House hearing on Capitol Hill, May 15, 2024. Credit: Michael Brochstein/Sipa USA via AP Images

It’s hard times at the Office of the Comptroller of the Currency (OCC), one of the three principal bank regulators in the country, along with the Federal Deposit Insurance Corporation and the Federal Reserve. All three, plus other financial institution regulators at the National Credit Union Administration and the Consumer Financial Protection Bureau, have been gutted to varying degrees over the first year of Trump 2.0. The decline of bank oversight is also coinciding with a number of rising threats to the financial system. In addition to possible asset bubbles in the tech and private-lending sectors, traditional banking has been significantly increasing its exposure to risky assets like cryptocurrencies. Earlier this fall, the OCC granted a federal bank trust charter to crypto firm Anchorage Digital. Last week, five more crypto firms received charters: Circle, Paxos, Ripple, BitGo, and Fidelity Digital Assets. Other crypto and fintech platforms have sent in applications, including PayPal and Coinbase.

For almost the entirety of the Biden administration, Michael J. Hsu ran the OCC. In May 2021, Hsu, who described himself as a “career public servant and a bank supervisor” to the core, was tapped by Biden’s Treasury secretary, Janet Yellen, to serve as first deputy comptroller; with the comptroller position itself vacant, that made Hsu acting comptroller. At that point, he had been in financial regulation for more than two decades—first joining the Federal Reserve Board’s legal division in 2002, then serving stints at the Securities and Exchange Commission, Treasury Department, and International Monetary Fund before returning to the Fed and overseeing its Large Institution Supervision Coordinating Committee. Alas, no longer. Last week, Hsu joined the venture capital firm Core Innovation Capital as a venture partner.

Core Innovation Capital likes to brand itself as a socially conscious partner of “mission driven companies whose financial success aligns with creating value for their customers.” Progressive branding is all over its website. CIC’s founder and managing partner quotes Banksy on the company’s staff page: “There is nothing more dangerous than someone who wants to make the world a better place.” Their regulatory partner adopts a similar vein, stating, “I’d love to see fintech solve for getting high-quality financial advice to everyone, not just the wealthy and large corporations that can afford to pay for existing low-tech solutions.” Despite these proclamations, CIC’s actual portfolio is littered with companies that have faced enforcement actions from a number of regulators, including the one Hsu himself only recently departed, for allegedly violating basic consumer protection laws and engaging in other abusive or potentially illegal activities.

CIC’s portfolio includes Brigit, which was sued by former President Biden’s FTC for false advertising, charging junk fees, and entrapping users in a misleading and confusing cancellation process for its subscription model. The portfolio also includes Ripple, which was first sued by Trump’s SEC in 2020 for alleged violations of securities law, which were ultimately settled in 2025. Notably, Trump’s second-term SEC reportedly attempted to ease its enforcement actions against Ripple despite years of agency work to the contrary. Why? It could be that the company also donated nearly $5 million to the Trump inauguration. Ripple is also among the crypto companies granted a bank trust charter by the OCC last week. Poetically, Ripple’s charter came just one day after the announcement that Hsu had joined CIC. Klover, another member of CIC’s portfolio, has allegedly charged as high as 1,000 percent interest on its cash advance product, leading to an ongoing class action suit in Pennsylvania, where the interest rate limit is 6 percent.

snip