Randall Quarles announced Monday that he will resign from the Federal Reserve’s board of governors at the end of the year after completing a four-year term as its top bank regulator, thereby filling President Joe Biden on the Fed’s influential board. Another vacancy will open for
Quarles has served as the Fed’s first vice president of oversight, which has given him broad authority over the banking system. In that role, he did extensive easing of some of the financial regulations implemented after the 2008–2009 global financial crisis and recession.
Quarles’ regulatory approach drew criticism from some at the Fed and from many progressives. It has also sparked resistance from progressives to a possible re-nomination of Jerome Powell as Fed chairman, who voted in favor of Quarles’ regulatory changes.
With Powell’s term as president ending in February, an announcement is expected sometime this month whether Biden will offer him a second four-year term. Powell is believed to be re-nominated by the president, although he may decide to elevate Lyle Brainard, the only Democrat on the Fed’s seven-member board, to the post of chairman.
In addition to Quarles’ soon-to-be-vacant position on the board, a second position is vacant and a third will open in January, when Vice Chairman Richard Clarida’s term ends. The seat count, held by the Fed chairman, gives Joe Biden a total of four possible slots to fill.
The president may decide to re-nominate Powell while promoting Brainard to replace Quarles as vice chair for supervision. The move could potentially placate at least some of Powell’s critics. Brainard cast some dissenting votes against Quarles’ regulatory efforts.
With many vacancies to fill, Biden has an opportunity to shift the Fed’s board toward a more Democratic-dominated one. This would underscore an important argument against Powell: Even if Biden promoted Brainard to the Fed’s top bank supervisory position, Powell could ignore or override efforts to tighten financial rules. If Biden were to successfully appoint three new governors to the Fed’s board, the number of Democratic appointees would exceed Republicans.
Late last month, in an appearance on CNN, Treasury Secretary Janet Yellen defended Powell against any assumptions that he had weakened bank rules. Yellen stressed that financial regulations had been “clearly strengthened” under the Fed leadership of Ben Bernanke, as well as under Powell as chair.
Members of the Board of Governors have standing votes at each Fed meeting on interest rate policy, a powerful tool that affects hiring and the economy. The 12 regional Fed Bank presidents also participate in policymaking meetings, although only five of them are able to vote on the Fed’s decisions. The president of the New York Fed has one permanent vote, and regional bank presidents have four votes that rotate between them each year.
Fed governors also vote on financial regulations, and they may take steps to regulate certain cryptocurrencies, known as stablecoins. Some officials, including Brainard and Powell, have discussed the inclusion of climate change considerations in the Fed’s bank oversight, a possibility met with opposition from Congressional Republicans.
With four slots open, the Biden administration could nominate as many candidates as packages. Potential nominees for three vacancies on the Fed’s board include Michigan State University economist Lisa Cook, who would be the first black woman to serve as Fed governor, and Sarah Bloom Ruskin, who served as the first Fed governor and financial advisor. had worked. Regulator in Maryland.
Another possible nominee is William Spriggs, chief economist at AFL-CIO and professor of economics at Howard University.
White House spokeswoman Karine Jean-Pierre declined to say how Quarrel’s departure could affect Biden’s selection for the board.
“All I can say is that this is incredibly important to the president, and he is taking it seriously,” Jean-Pierre said at Monday’s briefing.
At a Senate hearing in September, Ohio Democrat Senator Sherrod Brown, who chairs the Senate Banking Committee, said, “The time has come for us to have a black woman on the board of governors.”