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Trump names Randy Quarles as Fed’s bank supervisor

(Bryan R. Smith/AFP/Getty Images)

The White House announced Monday evening that it will nominate Randal Quarles, a former Treasury official and private equity investor, to fill a vacant seat on the Federal Reserve’s Board of Governors in an influential position overseeing the banking system.

Quarles would take the lead on rolling back any banking regulation under the Trump administration as vice chairman for supervision, a post created by the 2010 Dodd-Frank Act.

The White House announcement, which was released after hours Monday, said Quarles would be nominated to the Fed’s board for the remainder of a 14-year term expiring Jan. 31, 2018, as well as for an additional 14-year term expiring Jan. 31, 2032. He would also be nominated for the vice chair post for a period of four years. Both positions require Senate confirmation.

Quarles had been rumored for several months as a candidate for the position at the Federal Reserve board, which has been operating with only four of its seven posts filled.

Supporters have hailed Quarles as a less ideological pick for the banking job, someone who would take a moderate, practical approach to implementing Trump’s promise to reduce financial regulation.

But Jordan Haedtler, campaign manager for the Center for Popular Democracy’s Fed Up coalition, criticized Quarles in a statement Monday night for his close connections with Wall Street and his opposition to banking rules, including the Volcker Rule, which restricts speculative investments by banks.

As a member of the Federal Reserve board, which sets monetary policy, Quarles may be a voice for raising interest rates more quickly than Fed members nominated during the Obama administration. In an op-ed for the Wall Street Journal in March 2016, Quarles and a co-author criticized the Federal Reserve for creating a source of “systemic risk” by keeping interest rates so low for so long following the financial crisis.

“Years of near-zero interest rates have led to a rise in speculative positions across a wide range of asset classes, as all financial institutions find themselves under intense pressure to seek adequate returns,” they wrote.

Quarles has also in the past advocated a rules-based monetary policy, which requires Fed board members to consult a mathematical formula in making decisions about the benchmark interest rate.

While most Fed economists look at such formulas in making their decisions, Federal Reserve Chair Janet L. Yellen has been an outspoken opponent of legislation that would bind the Fed’s decisions to these rules, arguing they are overly restrictive and could result in economic damage.

Quarles could not immediately be reached for comment.

Quarles worked for President George H.W. Bush as deputy assistant secretary for financial institutions policy, as well as President George W. Bush as undersecretary for domestic finance. He also worked as the U.S. executive director of the International Monetary Fund, as a partner at various law firms, and as the founder and managing director of a private investment firm, the Cynosure Group.

His wife, Hope Eccles, is a relative of former Fed chairman Marriner S. Eccles, after whom the building where the Federal Reserve Board has its offices is named.

As vice chair of supervision, Quarles will be in charge of how financial rules are enforced and oversee the annual stress tests of America’s largest banks. He will likely play an important role shaping the scope of the post, which has never been officially filled. Former Fed governor Daniel Tarullo, who unofficially took on the role during the Obama administration, stepped down in February, leaving three vacant positions on the Fed’s Board of Governors.

The Trump administration has the chance to significantly reshape the character of the central bank through these appointments, as well as the selection of the Fed’s leadership early next year when the terms of Chair Yellen and Vice Chair Stanley Fischer expire.

President Trump has often talked about his preference for low interest rates, but he has also given conflicting signs about his views on the path of the Federal Reserve. During the campaign, Trump criticized Yellen for holding interest rates low to benefit the Obama administration, accusations she dismissed. But in an interview in April, Trump suggested that he might be open to reappointment.

See also:

The Federal Reserve is divided over its longer-term path

Fed raises interest rate, signaling confidence in the economy

Trump soon faces some of his most consequential appointments yet