Randy Quarles, a Bush-era regulator whom Democrats criticized for not doing enough to prevent the 2008 financial crisis, has been confirmed by the U.S. Senate to lead the Federal Reserve's oversight of Wall Street.
The 60-year-old won approval to join the central bank's board of governors in a 65-32 vote on Thursday, Oct. 5, as well as approval to serve as vice chairman of banking supervision. The decisions followed a split recommendation from the chamber's banking committee in early September and came just in time to prevent the panel from shrinking to less than half its full complement of seven members when Vice Chairman Stanley Fischer leaves mid-month.
All of the governors are members of the bank's 12-person Federal Open Market Committee that sets monetary policy, so the excess vacancies would have shifted the balance of power even further toward the five regional Fed presidents who serve on the panel, as well as heightened uncertainty about the pace of interest-rate adjustments.
Even so, Quarles' portfolio as head of the Fed's regulatory programs, handled on a de facto basis by Governor Daniel Tarullo before his departure earlier this year, is vastly different from that of the 73-year-old Fischer, a monetary policy expert. Among his responsibilities will be overseeing annual stress tests designed to ensure that the largest U.S. banks have sufficient capital to withstand an economic risis.
Quarles, 60, has been serving as managing director at family-investment specialist Cynosure Group and was the undersecretary for domestic finance in former President George W. Bush's Treasury Department prior to the 2008 financial crisis, according to BoardEx, a relationship-mapping service of TheStreet.
It was his performance in that role that spurred criticism from some Democrats on the Senate Banking Committee, though he still won 17 out of 23 votes.
Quarles is the wrong choice to serve as a financial watchdog, Sen. Sherrod Brown of Ohio, the highest-ranking Democrat on the committee, said during the confirmation hearing. His role at Treasury was to "coordinate oversight of the finance industry," Brown said, and "many of his statements leading up to the crisis were far too credulous when it came to industry claims that we need not worry about a credit bubble."
While Quarles acknowledged that post-crisis policies had made the financial system safer and more resilient, he said "some refinements will undoubtedly be in order."
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It's an attitude supported by both President Donald Trump, who argues that excess regulation since the crisis had hindered U.S. economic growth, and the country's largest banks. Companies from JPMorgan Chase & Co. (JPM) - Get Report to Citigroup Inc. (C) - Get Report and Bank of America Corp. (BAC) - Get Report would stand to benefit from looser rules.
"The key question," Quarles said during his hearing, "will be ensuring that, as we continue to refine the system over time, we do so while maintaining the robust resilience of the system to shocks."
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