Governor with Fed Reserve to leave

Open spots will give Biden chance to reshape leadership

Randal K. Quarles, a Federal Reserve governor who spent four years overseeing bank supervision, will step down from the Fed in December — opening an additional seat that will allow the Biden administration to reshape the central bank’s leadership.

Quarles’ role as vice chair for supervision expired in October, but his term as governor was set to last until early 2032. The Trump appointee was widely expected to stay on until his time as head of the Financial Stability Board, a global monitoring and standard-setting body, ended in December. It was an open question whether he would stay after that.

The announcement that he will step down is likely to be greeted warmly by Democrats, many of whom have been critical of Quarles’ push to relax some postcrisis financial regulations. Many Democrats have been calling for the administration to nominate a diverse set of leaders to the central bank.

President Joe Biden already has one open spot on the central bank’s seven-seat Board of Governors to fill, and will have another when Richard Clarida, the Fed’s vice chair, sees his term as governor expire early next year. This will give the administration at least three open spots.

Jerome Powell’s term as the Fed’s chair is also scheduled to expire early next year, though his term as governor lasts until early 2028. Fed chairs typically leave their unexpired governor seats if they are not reappointed to their leadership roles, though that has not always been the case.

It is not clear when Biden will announce his central bank nominees, including whether he plans to reappoint Powell. He said last week that the decision would come “fairly quickly.” Both Powell and Lael Brainard, a Fed governor who is widely viewed as the other front-runner to lead the institution, were seen leaving the White House last week.

Powell was initially chosen as a Fed governor by President Barack Obama, but he was elevated to chair by President Donald Trump.

While Powell has been focused on interpreting the Fed’s fullemployment goal expansively, he has come under fire for voting for Quarles’ regulatory decisions, which in many cases made bank oversight less onerous.