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NEWSMAKER-Fed warns Wall Street of Ruskin’s nominee for chief of staff

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WASHINGTON, Jan. 13 () – U.S. President Joe Biden’s decision to select Sarah Blum Raskin to regulate and control the Federal Reserve plays a progressive role in controlling Wall Street’s largest banks.

Raskin, a former Fed governor and Treasury officer under former President Barack Obama, will replace Randal Quarles, who was appointed Fed Deputy Chief of Staff in 2017 by former Republican President Donald Trump, a source familiar with the matter said. .

A source familiar with the process said he chose Biden Raskin. His candidacy must be approved by the Senate.

Kvarl resigned here in October and left the central bank in late December.

The seven-member Fed’s seven-member board of directors, whose banking supervision role could be filled by Biden, is the most important of the several vacancies, and the Democrat, who was elected for the first term, has years of Wall Street oversight and monetary policy. allows you to control the direction. kel.

According to the source, Biden also chose economists Lisa Cook and Philip Jefferson to help fill the Fed board, while the source said economists Lisa Cook and Philip Jefferson helped fill the Fed board.

Raskin is expected to take a tougher position on Wall Street than Quarls, who surprised progressives with an industry-friendly approach that included easing several rules introduced after the 2007-2009 global financial crisis.

It pursues policies on complex issues such as financial risks against climate change, community lending rules, and financial technology companies, and sees several changes to Quarles rules that cover banks’ speculative investments, derivatives trading, liquidity, and equity rules. rib comes out.

Biden has already decided to nominate Fed Chairman Jerome Powell for a second term and Governor Lael Brynard for another vice president on the Fed’s economic and monetary policy agenda.

As in these two appointments, Raskin also had to be approved by a split Senate, where he could face very partisan acceptance. Raskin has been confirmed twice before, but these voices preceded the current guerrilla rage that engulfed Capitol Hill.

Those who have worked with him say he can reach a consensus.

“Sarah is an incredibly collaborative person,” said Kathleen Murphy, director general of the Massachusetts Bankers Association. “He listens to everyone.”

As a former CEO of the Maryland Bankers Association, Murphy worked closely with Raskin to manage the global financial crisis when he served as Maryland State Financial Regulatory Commissioner from 2007-2010. Together, they resolved Maryland’s first banking crisis in 40 years.

“Everyone felt there was a voice around the table. They may not have agreed with his opinion … but they felt they had heard their opinion.

Raskin did not immediately respond to a request for comment Thursday night.

A Harvard-educated lawyer, Raskin, who holds a bachelor’s degree in economics from Amherst College, served on the Fed Board from 2010 to 2014 before moving to the Treasury as Deputy Secretary of the Treasury.

Although his role at the time did not include banking supervision, Raskin took a firm position on key elements of the Fed’s post-crisis reform agenda.

For example, it condemns private trade as “low or no real economic value.” He also urged a firm interpretation of the Volker rule, a major reform that has curtailed speculative investment that Quarles has softened over the past four years.

Quarles noted that he has adapted these and other regulations to the risks of banks, and that the excellent performance of the industry in the context of the economic crisis of the pandemic shows that it has not weakened the system.

Powell, a former partner of the private equity giant Powell Quarles, who favors Quarlz, backed the change, but said he would allow the new supervisor to lead on regulatory matters.

Barry Linn, executive director of the Open Markets Institute’s advocacy group, said in a statement: “We are delighted that President Biden is nominating such a strong champion champion in financial regulatory protection.”

DEREGULATION CUTTING

If confirmed, Raskin is faced with the problem of how much time and political capital it would take to reconsider Quarles ’Wall Street gifts, rather than focusing on new issues such as climate change, cryptocurrencies and fintech.

Major efforts to reconsider Quarles’ case will absorb the resources and political oxygen needed to address other Democratic priorities, and will be resisted by other regulators and even some centrist Democratic lawmakers. can show.

As Fed board governor, Raskin will also vote on monetary policy. If confirmed, it would be an important milestone for the Fed as the central bank manages the U.S. economy and recovers it from the COVID-19 pandemic in 2020, which caused a brief but historically deep recession.

The Fed changed its policy position at the end of 2021, when inflation was almost three times higher than the central bank’s 2% flexible annual target. Rising prices of consumer goods and services, an extreme rise that could have been “transient” initially aimed at the coronavirus pandemic, have become a serious political problem and headache for Biden and the Fed. (Interviews by Michelle Price, Pete Schroeder and Andrea Shalal edited by Dan Burns, Chizu Nomiyama and Leslie Adler)

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