Biden Urged to Replace Quarles; Clarida’s Not Talked Fed Future

With only months left on their current terms, Federal Reserve vice chairs Randal Quarles and Richard Clarida were reminded on Tuesday that their time in office may be drawing short.

Quarles’s tenure as the Fed’s top banking supervisor expires Oct. 13 while Clarida’s term ends Jan. 31, a few weeks before Chair Jerome Powell’s own tenure at the helm is up.

President Joe Biden, who can reshape the leadership of the U.S. central bank if he wants by replacing any of them, is under explicit pressure from some Democrats to dump Quarles.

Senator Elizabeth Warren, during a tart exchange over banking oversight, pointed out to Quarles that his term as vice chair for supervision was up in five months.

“Our financial system will be safer when you are gone,” she told a hearing before the Senate Banking Committee. “I urge President Biden to fill your role with someone who’ll actually keep our financial system safe.”

Quarles is also serving a term as a Fed governor that doesn’t expire until 2032, but Fed officials step down by tradition if not reappointed to their leadership roles.

Regulatory Rollback

Rollback of some banking rules by the Fed under Powell and Quarles has drawn withering criticism from Democrats, even as they applaud the central bank’s ultra-easy monetary policy to support the post-pandemic economic recovery.

Clarida led an institutional rethink of the Fed’s approach to its goals for stable prices and maximum employment that now aims to be more inclusive -- a shift that was warmly welcomed by Democrats.

During an interview with Yahoo! Finance, he was asked if he’s had any discussions with the Biden administration about a possible reappointment.

“I have not had any such discussions,” Clarida said. “I am enjoying being Fed vice chair enormously, it’s been an enormous privilege to do it, and I’m eager to get as much done as I can in my remaining time in this position.”

Biden Urged to Replace Quarles; Clarida’s Not Talked Fed Future

Biden says he hasn’t spoken to Powell out of respect for the Fed’s independence -- marking a sharp contrast with his predecessor Donald Trump, who publicly berated the chair over policy decisions.

Even so, the White House selection process will likely coincide with Fed deliberations about scaling back its massive monthly bond purchases, potentially making it very significant for Biden’s presidency.

Depending on how it’s handled, it could inject uncertainty over who will be at the helm as the Fed tries to delicately adjust policy without roiling financial markets or stalling the economic recovery.

Powell has deflected all questions on whether he’d stay at the helm if asked, but says he loves the job. Roughly three quarters of economists surveyed by Bloomberg predict Biden will offer him another term.

©2021 Bloomberg L.P.

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