The chairman Sherrod Brown (D-OH) asked on 28.
Kevin Dietsch | Swimming pool | Reuters
The Senate Supreme Democrat in charge of banking supervision wants Federal Reserve Chairman Jerome Powell to suspend all financial deregulation until President Joe Biden nominates new members to the central bank.
Senator Sherrod Brown, chairman of the Senate Banking Committee, has called on Powell to stop withdrawing industry regulations until the president has a chance to select a replacement for the outgoing Fed vice chairman for oversight, Randal Quarles.
“When Vice Chairman Quarles was confirmed in his position, bank lobbyists cheered. Not only did he immediately put forward a plan to shift post-crisis rules in favor of industrial interests in favor of protecting working class families, he dutifully continued his deregulation efforts despite the weakening economy. “Shaken by a global pandemic” Brown wrote in a letter dated Oct. 13.
“A new direction for financial regulation needs to be determined by whoever the president elects, and Congress confirms, for critical executive positions on the board,” added the Ohio Democrat.
Quarles’ tenure as the Fed’s chief banking regulator ends Wednesday, opening the White House another high-profile position at the central bank to be filled in the coming months. His position will remain vacant until Biden nominates a new candidate to oversee the land’s lenders and the Senate approves it.
“As the vice chairman’s term expires, he will no longer chair the committee on oversight and regulation,” a Fed spokesman told CNBC. “This committee meets without chairing as necessary. Matters that fall within the remit of the committee are only referred to the full board if there is broad consensus among the committee members.”
Quarles’ separate tenure as governor on the Fed’s board of directors is another 10 years.
Many Democrats see Quarles’ departure from the vice-chairmanship as an opportunity to better oversee merger proposals, capital requirements, and other regulatory issues banks face.
Senator Elizabeth Warren, a Massachusetts Democrat and a member of the banking committee, criticized Quarles in May for what she and other Democrats viewed as his dangerous and relaxed approach to financial oversight.
“Instead of protecting the system, you spent your time at the Fed wherever you could drill holes in the safety net,” she said at the time. “Your term as chairman is up in five months. And our financial system will be safer when you are gone.”
Quarles was the first to hold the oversight role, a position created by the 2010 Dodd-Frank Act that reshaped the oversight of the financial sector after the Great Recession. The position had remained vacant until 2017 when former President Donald Trump named him one of Powell’s deputies.
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Quarles’ vacancy comes months before Fed Vice President Richard Clarida’s term ends in January and Powell’s tenure as chairman in February. With a vacancy on the seven-member Fed executive board, Biden will have several options to change leadership at the country’s central bank.
The White House has not commented on when it will announce its nominees, although deputy press secretary Karine Jean-Pierre said last week that Biden had “confidence in Powell at this point.”
Powell is still favored by lawmakers on both sides of the political gang for a second term and would likely face a simple confirmatory vote in the Senate. He enjoys bipartisan support, thanks largely to the Fed’s quick work to secure the US economy during the Covid-19 crisis and to ensure that companies have easy access to liquidity.
Trump nominated Powell as head of the Fed in 2017, years after former President Barack Obama first appointed him to the board of directors of the central bank. Virtually every Republican supports his appointment.
That hasn’t stopped some progressive Democrats from pushing Biden to choose a candidate they see to be tougher on banks and more focused on issues like climate change and income inequality.
Progressive Reps. Alexandria Ocasio-Cortez, Rashida Tlaib, Ayanna Pressley, Mondaire Jones and Jesus “Chuy” Garcia argued at the end of August.
“In order to move forward with a nationwide approach that eliminates climate risk and at the same time makes our financial system more secure, we need a chairman who is committed to these goals,” wrote the representatives. “We call on President Biden to reinvent a Federal Reserve that focuses on eliminating climate risk and promoting racial and economic justice.”
Wall Street widely expects the White House to seek a promotion from Fed Governor Lael Brainard. She is a strong candidate to fill Quarles’ position unless asked to replace Powell if Biden decides to replace the Fed chief.