President Sherrod Brown (D-OH) questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the apartment building from Hart Senate offices in Washington, DC, September 28, 2021.
Kevin Dietsch | Swimming pool | Reuters
The top Senate Democrat responsible for banking supervision wants Federal Reserve Chairman Jerome Powell to suspend financial deregulation until President Joe Biden appoints new central bank members.
Senator Sherrod Brown, chairman of the Senate Banking Committee, urged Powell to stop rolling back industry regulations until the chairman has a chance to choose a replacement for the outgoing Fed vice chairman for supervision Randal Quarles.
“When Vice President Quarles was confirmed in his post, bank lobbyists applauded. rocked by a global pandemic, ”Brown wrote in a letter dated October 13.
“A new direction for financial regulation must be determined by whoever the president chooses, and Congress confirms this, in critical leadership positions on the board of directors,” added the Ohio Democrat.
Quarles’ tenure as the Fed’s main banking regulator ends Wednesday and opens another high-level central bank position for the White House to be filled in the coming months. His post will remain vacant until Biden appoints, and the Senate confirms it, a new candidate to oversee the country’s lenders.
“In light of the expiration of the vice president’s term, he will no longer chair the supervisory and regulatory committee,” a Fed spokesperson told CNBC. “This committee will meet as necessary without a chair. Matters falling under the committee’s responsibility will only be considered by the full board if there is broad consensus among committee members.”
Quarles’ separate tenure as governor on the Fed’s board lasts another 10 years.
Many Democrats see Quarles leaving the post of vice president as a chance to better control merger requests, capital requirements and other regulatory issues that banks face.
Massachusetts Democrat Senator Elizabeth Warren and member of the banking committee blasted Quarles in May for what she and other Democrats saw as his dangerous and relaxed approach to financial supervision.
“Instead of protecting the system, you spent your time at the Fed poking holes in the safety net wherever you could,” she said at the time. “Your term as president ends in five months. And our financial system will be more secure when you’re gone. “
Quarles was the first person to hold the supervisory post, a post created by the Dodd-Frank legislation of 2010 that redesigned financial sector supervision in the aftermath of the Great Recession. The post remained vacant until 2017, when former President Donald Trump appointed him as one of Powell’s MPs.
Quarles’ vacancy comes months before the tenure of Fed vice chairman Richard Clarida ends in January and Powell’s term as chairman expires in February. Combined with an existing vacancy on the Fed’s seven-member board, Biden will have several opportunities to reorganize the leadership of the country’s central bank.
The White House has not commented on when it plans to announce its candidates, although Deputy Press Secretary Karine Jean-Pierre said last week that Biden “has confidence in Powell for the time being.”
Powell is still favored by lawmakers on both sides of the political aisle for a second term and would likely face an easy reconfirmation vote in the Senate. It enjoys bipartisan support thanks in large part to the Fed’s swift work to secure the U.S. economy during the Covid-19 crisis and ensure businesses have easy access to liquidity.
Trump appointed Powell to head the Fed in 2017, years after former President Barack Obama first appointed him to the central bank’s board. His nomination is supported by virtually all Republicans.
That hasn’t deterred some progressive Democrats from pressuring Biden to pick a candidate they see harder on the banks and more focused on issues like climate change and income inequality.
Progressive Representatives Alexandria Ocasio-Cortez, Rashida Tlaib, Ayanna Pressley, Mondaire Jones and Jesus “Chuy” Garcia pleaded in late August.
“To move forward with a whole-of-government approach that eliminates climate risk while making our financial system more secure, we need a president who is committed to achieving these goals,” the quintet wrote. “We urge President Biden to reimagine a Federal Reserve focused on eliminating climate risk and promoting racial and economic justice.”
Wall Street widely expects the White House to call on Fed Governor Lael Brainard for a promotion. She is a serious candidate for Quarles’ post if she is not asked to replace Powell if Biden decides to replace the Fed chief.