This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Tarullo Overlooked in Race to Head Fed

NEW YORK ( TheStreet) - The battle over the Obama administration's pick to be the next Federal Reserve chairman -- whether it is Larry Summers, Janet Yellen or someone else -- raises overlooked questions about a key position directly below the central bank chief- that of the Fed's top bank supervisor.

Since 2009, that role has been filled by Daniel Tarullo, a member of the Fed's board of governors, in a semi-formal basis. Fed Chairman Ben Bernanke, who most observers agree will step down by the end of the year, has largely given Tarullo free rein to carry out his own ambitious regulatory agenda for big banks, including tough capital and leverage restrictions that could eventually drive some large financial institutions to downsize and divest assets or raise billions of dollars in capital.

All of this has made Tarullo persona non-grata with the bank lobby. "The banks are unhappy with Tarullo because he is trying to make changes to how they do business," said a former top bank regulator.

The former Georgetown University law professor has often succeeded at getting reluctant Fed governors to back his efforts and he has unveiled a to-do list of harsh restrictions to come, including a measure that would set forth just how much long-term debt and equity a megabank must maintain so that its collapse doesn't cause collateral damage to the markets.

Tarullo's effort in this regard is particularly notable because Sunday marks the five-year anniversary of the failure of Lehman Brothers Holdings Inc., the first in a series of big bank collapses that wreaked havoc on our economy. The delay in implementing these changes, which are enshrined in the post-crisis Dodd-Frank Act approved three-years ago, demonstrates the difficulty Tarullo and other bank regulators have faced implementing banking rules since the crisis abated.

As the Obama administration looks to replace Bernanke at the top of the central bank, it is unclear whether Tarullo will remain in control of the Fed's bank capital and rule-setting agenda.

Some observers contend that Tarullo -- already at the Fed for four-and-a-half years -- will resign unless he is installed formally as vice-chairman for supervision at the Federal Reserve, a position that was authorized as part of the Dodd-Frank financial reform law. A Fed spokeswoman declined to comment.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.06 0.04%
C $44.10 -0.29%
GS $158.20 -0.83%
MS $26.18 0.06%
AAPL $92.39 -0.91%


Chart of I:DJI
DOW 17,685.39 +24.68 0.14%
S&P 500 2,046.99 -3.64 -0.18%
NASDAQ 4,701.3840 -15.71 -0.33%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs