Fed’s Quarles to Step Down in December
November 15, 2021
On November 8, the Federal Reserve released a letter to President Biden by Randal K. Quarles, a Fed governor and its former vice chairman for bank supervision, in which he resigned his position. “I intend to resign my position as a governor of the Federal Reserve during or around the last week of December of this year,” wrote Quarles in the two-sentence letter.
Quarles’s role as vice chair for bank supervision expired in October, but his term as governor was set to last until early 2032. The 2010 Dodd-Frank Act created the vice chair position in the aftermath of the 2008 financial crisis. The Trump appointee also serves as head of the Financial Stability Board (FSB), a global monitoring and standard-setting body. His term at the FSB is also set to end in December.
Democrats have been critical of Quarles’ efforts to relax financial regulations following the financial crisis. In addition, many Democrats are pressuring the Biden Administration to nominate a more diverse set of leaders to the central bank. The Fed’s seven-seat Board of Governors has regulatory powers over big banks. It sets interest rate policy alongside the Fed’s 12 regional branch presidents, five of whom vote on monetary policy at any given time. Although the New York Fed is granted a constant vote, regional bank presidents rotate through their voting seats. Governors also have a constant vote.
The board already had one opening and will have another when Richard H. Clarida, the Fed’s vice chair, sees his term as governor ending early next year on January 31. With Quarles’ resignation, President Biden will have at least three open spots to fill. Fed governors are nominated by the White House and then confirmed by the Senate.
Quarles’ resignation may bolster Fed Chair Powell’s chances of a second term. Some progressive groups argued that governors appointed or elevated by President Trump continued to dominate the board. However, with the board’s three openings, in addition to Lael Brainard, a Fed governor appointed by President Obama, the balance of power will shift toward Democrats. President Biden has not indicated when he will decide on Powell only to say that the decision will come “fairly quickly.”