Corp exec latest nominated for Trump Admin.

President Trump nominated Janet Dhillon to chair the Equal Employment Opportunity Commission (EEOC), the forceful federal agency that administers and enforces civil rights laws against workplace discrimination.  Ms. Dhillon is currently Executive Vice President and General Counsel of Burlington Stores (BURL) and previously was EVP and GC of J.C. Penney Co. (JCP) and SVP and GC of US Airways Group, which merged with American Airlines (AAL) in 2013.  She is the latest corporate executive nominated to serve in the Trump Administration.  Secretary of State Rex Tillerson, former CEO of ExxonMobile (XON), and Small Business Administration (SBA) Administrator Linda McMahon, former CEO of World Wrestling Entertainment (WWE), are among the most well-known execs who have joined Mr. Trump's cabinet, although the EEOC chair ranks just below the cabinet-level.  

According to Bloomberg, Sen. Lamar Alexander (R- TN), chairman of the Health, Labor and Pension Committee, said that he's "hopeful" the nominee "will help restore" the agency to "its core mission of protecting American workers from discrimination."  In general, the corporate community continues to anticipate that the Trump administration will usher in an improved business climate, manifested by tax reform, deregulation and a massive infrastructure plan.  Treasury Secretary Steve Mnuchin is leading the effort to pass a package of business and personal tax cuts, which he hopes can get done this year.  In 2009, after leading the investor group that purchased failed IndyMac Bank from the Federal Deposit Insurance Corp., Mr. Mnuchin became CEO of OneWest Bank, the new name for the bank.  In 2015, Mr. Mnuchin became vice chairman and board member of  CIT Group (CIT), upon the $3.4 billion acquisition of OneWest by the financial holding company.  When nominated, Mr. Mnuchin also stepped down as a director of Sears Holdings Corp. (SHLD) and as CEO of Dune Entertainment, a private company that finances Hollywood films.

Meantime, Transportation Secretary Elaine Chao is working on formulating a $1 trillion infrastructure plan that relies heavily on public-private partnerships.  Ms. Chao formerly served as CEO of United Way, a worldwide nonprofit network of community service organizations, and has been a member of the boards of directors of C.R. Bard (BCR), Clorox Co. (CLX), Dole Food Co. (DOLE, prior to being taken private by CEO David Murdock), HCA Healthcare (HCA), Ingersoll-Rand (IR), Lotus Development (prior to its acquisition by IBM), Millipore Corp. (prior to its acquisition by Germany's Merck), News Corp. (NWSA), Northwest Airlines (prior to its acquisition by Delta), Protective Life Insurance (prior to its acquisition by Dai-ichi Life), Raymond James Financial (RJF), Twenty-first Century Fox (FOXA), Vulcan Materials (VMC) and Wells Fargo & Co. (WFC).  It could be edifying to track an index or ETF comprised entirely of companies on whose boards Ms. Chao has served.

Just today, the Senate confirmed Neomi Rao as Administrator of Office of Information and Regulatory Affairs, a role otherwise known as the regulatory czar.  OIRA, part of the Office of Management and Budget (OMB), is often referred to as the "most important office you never heard of" because it must review all significant regulations issued by all federal agencies before they become legally binding on the citizenry, in essence the "cockpit" of the regulatory state.  Since 2006, Ms. Rao has been an associate professor of law at George Mason University and director of its Center for the Study of the Administrative State.

Ms. Rao is expected to spearhead the administration's drive to overhaul the regulatory environment for American business.  "I applaud my colleagues in the Senate for confirming Professor Rao's nomination," said Sen. Ron Johnson (R-WI), chairman of the Senate Homeland Security and Governmental Affairs Committees, in a statement.  "We can all agree that federal regulations should achieve their aim without imposing unnecessary costs on the country's economy and job creators.  I look forward to working with Professor Rao to reduce the burden of regulations - by our estimates as high as $2 trillion a year - that weigh on the American economy."

Although her confirmation, by a 54-41 vote largely along party lines, was never in doubt, Senator Elizabeth Warren (D- MA) strongly objected to her suitability for the job.  "If confirmed, Professor Rao will be perfectly positioned to put her theories into practice," Sen. Warren said.  "She will head the Trump administration's efforts to toss out the rules that big businesses don't like."  Sen. Warren's position could have been swayed by a coalition of consumer, small business, labor, good government, financial protection, community, health, environmental, civil rights and public interest groups that wrote to urge the committee chairman and ranking member, Sen. Claire McCaskill (D- MO), to vote against Ms. Rao's confirmation.  The coalition contends that '[t]he Trump Administration has taken a strong deregulatory stance and used their selection of individuals, such as Scott Pruitt as the Environmental Protection Agency (EPA) Administrator, Betsy DeVos as the Secretary of Education and Ajit Pai as the Federal Communications Commission (FCC) Chairman, who are actively hostile to the missions of the agencies they run to start the roll back of public protections from within [...and that P]rofessor Rao's nomination to head OIRA is another piece of the Trump deregulatory agenda."

The degree to which the administration will achieve its overarching aims, i.e., tax reform, deregulation, and infrastructure modernization, and the time line to do so, remains to be seen.  Although the President last month touted the "just-about record-setting pace" his administration has set, the sluggish rate of staffing it has surely hindered the implementation of its agenda so far.  By May 20th, President Trump had sent only 94 nominees to Capitol Hill, 35 of whom had been confirmed by the Republican-controlled Senate.  At a similar stage of Barack Obama's first term, the Democrat-controlled Senate had confirmed 130 of the 219 of the nominees sent its way.  There are over 550 key positions requiring Senate confirmation.  To enable governance, some Republican senators have suggested installing temporary or "acting" officials who could serve without Senate approval for up toe 210 days or, in some cases, for up to 420 days, per the Congressional Research Service.  Sen. James Inhofe (R-OK) believes that temporary appointees may be more willing to implement Mr. Trump's ambitious agenda than more moderate appointees who would be able to withstand the scrutiny of the Senate confirmation process.

Since it has lately picked up the nomination pace, there's no indication at this point that the Trump administration intends to embark on such a course.  By the end of June, Mr. Trump had formally submitted 178 nominees for Senate consideration, 46 of whom had been confirmed.  On average, the Senate has taken 43 days to confirm candidates from formal receipt of their nominations, a longer period than for the previous four presidents.  Perhaps part of the explanation for the slow pace is that the Trump administration is selecting candidates from a broader pool than was the case for the Obama administration.

Back in 2009, at the outset of the Obama administration, Michael Cembalest, J.P. Morgan Asset Management's chief investment officer analyzed the composition of presidential cabinets dating back to 1900 when the Secretary of Commerce position was created.  He assessed the prior private-sector experience of all 432 cabinet members, focusing on those positions most pertinent in this regard: Secretaries of State; Commerce; Treasury; Agriculture; Interior; Labor; Transportation; Energy; and Housing & Urban Development.  Many of the individuals filling these positions, he notes, started a company or ran one, with first-hand experience in hiring and firing, domestic and international competition, red tape, recessions, wars and technological change.  Their industries included agribusiness, chemicals, finance, construction, communications, energy, insurance, mining, publishing, pharmaceuticals, railroads and steel - a cross section of American commercial activity.  His analysis makes clear that the Obama administration, compared with past Democratic and Republican ones, marked a departure from the traditional reliance on a balance of public- and private-sector experience.

Mr. Cembalest pointed out that it was no surprise at the time that private-sector engagement struck some as pointless, if not counterproductive.  The prevailing sentiment was captured by one of Treasury Secretary Tim Geithner's deputies: "Why would we consult the very executives who got us into this mess?"  With his trademark combative flair, House Financial Services Committee Chairman Barney Frank added: "The private sector got us into this mess.  The government has to get us out of it."  Mr. Cembalest conceded that, to a large extent, this cynicism was a byproduct of the colossal mismanagement of many financial and automotive firms.  Nevertheless, mainly because critical U.S. job creation would have to come from the private sector Mr. Cembalest saw as detrimental the shortage of private sector experience in the Obama administration, i.e., 21% versus 52% for the G.W. Bush administration and 46% for the Clinton administration.  The Trump cabinet registers approximately 50% on the private-sector scale.

The Trump administration has sketched out promising policies for improving the business climate for corporate America, which would perhaps boost lagging GDP growth over time.  Despite the slow pace of staffing the administration, there has been an uptick in appointees with private-sector experience, and specifically publicly-traded company executives, who bring to the table their perspective on policy making.  In lieu of legislation, President Trump has aggressively issued executive orders advantageous to certain commercial interests, e.g., directives to advance oil pipeline construction and to reconsider automobile fuel standards.  Moreover, on January 30, the President signed Executive Order 13771 requiring that two regulations be eliminated for every new one issued by federal departments or agencies; as yet, there's no known instance of this so-called 2-for-1 order put into practice.  At this point, however, a clear-eyed assessment reveals minimal headway made on broader policy objectives important to corporate America.

Robert Stead