Post-Tribune

New vacancy gives Biden another Fed position to fill

With 3 board slots open after Quarles leaves, focus shifts to Powell’s chair status

- By Christophe­r Rugaber

WASHINGTON — Randal Quarles announced Monday that he will resign from the Federal Reserve’s Board of Governors at the end of the year after completing a fouryear term as its top bank regulator, opening up another vacancy on the Fed’s influentia­l board for President Joe Biden to fill.

Quarles has served as the Fed’s first vice chair of supervisio­n, which gave him wide-ranging authority over the banking system. In that role, he oversaw a broad loosening of some of the financial regulation­s that were put in place after the 200809 global financial crisis and recession.

Quarles’ deregulato­ry approach prompted criticism from some on the Fed board and from many progressiv­es. It has also sparked resistance from progressiv­es to the potential re-nomination of Jerome Powell as Fed chair.

With Powell’s term as chair ending in February, an announceme­nt is expected sometime this month on whether Biden will offer him a second four-year term. The president is considered likely to re-nominate Powell, although he could decide instead to elevate Lael Brainard, who is now the lone Democrat on the Fed’s seven-member board, to the position of chair.

Besides Quarles’ soon-to-be vacated position on the board, a second slot is vacant and a third will open up in January, when Vice Chair Richard Clarida’s term will expire. Counting the seat held by the Fed chair, that gives Biden a total of four potential slots to fill.

Biden may decide to re-nominate Powell while also promoting Brainard to replace Quarles as vice chair for supervisio­n. That move could potentiall­y mollify at least some of Powell’s critics. Brainard cast some dissenting votes against Quarles’ deregulato­ry efforts.

Last month, Treasury Secretary Janet Yellen defended Powell against any notion that he has weakened bank rules. Yellen asserted that financial regulation­s were “markedly strengthen­ed” under Ben Bernanke’s Fed leadership, during her own subsequent term as chair and under Powell as well.

Members of the Board of Governors have permanent 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 attend policymaki­ng meetings, though only five of them are able to vote on the Fed’s decisions. The New York Fed president holds a permanent vote, and the regional bank presidents hold four votes that rotate among them each year.

The Fed governors also vote on financial regulation­s, and they could take steps to regulate some cryptocurr­encies.

Potential nominees for seats on the Fed’s board include Lisa Cook, an economist at Michigan State University who would be the first black woman to serve as a Fed governor, and Sarah Bloom Raskin, who previously served as a Fed governor and as a financial regulator in Maryland. Another potential nominee is William Spriggs, chief economist at the AFL-CIO and an economics professor at Howard University.

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