Story highlights The Federal Reserve chairman named to make sure “rigged” derivatives markets are free from new regulations backed out because he wasn’t confirmed.
You probably know a man named Randal Quarles, who is the No. 2 official at the Federal Reserve. It’s fair to say you also know that he opposed a White House push to put new rules on Wall Street. Now he’s stepping down. And now we know what happened.
As news broke that the administration’s proposed chairman of the Federal Reserve had become too controversial, the White House’s choice to head that pivotal position withdrew his name from consideration. Randal Quarles would have been nominated to be a member of the Federal Reserve Board of Governors. He’s a former Goldman Sachs executive, law professor, and once the vice chairman of the Senate Banking Committee.
As The Hill reports, Quarles stepped down Thursday, accepting responsibility for how a bipartisan deal to replace the Dodd-Frank financial regulations is shaping up. It was reported that Quarles had “advocated for open trade in derivatives and competition to keep the markets competitive.” He would have also been the Fed’s vice chairman for supervision, leading the Fed’s inspection of large Wall Street banks.
The remaining candidate for the post of Fed chairman, Kevin Warsh, has received mixed reviews. He has made it clear he believes the Dodd-Frank Wall Street reforms are outdated and too restrictive.
“I am proud of my work as a regulator. The most significant regulatory victories in recent history — the banking system’s strong safety and soundness, its ability to reduce too-big-to-fail stress, and to prevent the next Great Recession — were products of the Dodd-Frank Act. Its implementation has played a major role in our nation’s resilience,” Warsh said in a statement.
According to The Washington Post, he is a managing director at Goldman Sachs, a position he will continue through November.
But Quarles’ withdrawal has been deeply protested by progressives in Congress, Democrats in the Senate, and liberal advocacy groups. They say a second Republican nominee who is more supportive of deregulation will make the process for reforming Dodd-Frank even more difficult.
“To confirm another Republican likely would continue this process of backpedaling on Wall Street and putting its interests before the interests of Main Street,” Sen. Elizabeth Warren, D-Mass., said in a statement to Business Insider. “I encourage President Trump to choose someone who will work to enforce Wall Street reform.”
Experts believe Quarles’ withdrawal has already had an impact on negotiations for financial reform. Quarles’ nomination was reportedly dropped as a basis for the Senate’s majority leader, Mitch McConnell, to fight for a new bill overhauling Dodd-Frank.
“Without a confirmed Federal Reserve vice chairman, the public will have much less confidence in an effort by Senate Republicans to leave Dodd-Frank intact or even weakened,” Jerry Webman, president of the Association for Financial Professionals, told the Washington Post.
The Senate’s GOP majority agreed to temporarily suspend Quarles’ confirmation, which it confirmed by voice vote on Thursday. That effectively allows for Quarles to remain on the Fed’s payroll, where he would have recused himself from anything involving Wall Street while the process continued.
“It is unfortunate that Senator Quarles and the White House made the decision not to support my nomination, but I respect their decision and look forward to the next administration,” Quarles said in a statement.
The Senate’s GOP majority immediately started to push forward on a new bill to replace Dodd-Frank after Quarles pulled out.
“The Senate has made it clear: our priority is to reform Dodd-Frank with new policy and regulatory tools that will help strengthen the financial system, prevent a repeat of the last crisis, and bring jobs back to Main Street,” Senate Majority Leader Mitch McConnell said in a statement.
Quarles’ name became attached to the Republican bank deregulation bill even before he was confirmed. It was set to get bogged down in committee and with a few contentious senators, who often take issue with it.
You may also like…
How Canada Stays Afloat and Why Trump’s NAFTA Invasion Is Threatening it
How I Became Trump’s Labor Secretary, and If the President Runs in 2020
Could Economy Vote End Market Panic That Caused Pre-Brexit Trouble?