Powell Vows to Defer to Fed’s Wall Street Watchdog on Rules
Federal Reserve Chairman Jerome Powell, sending a message to progressives worried about his possible renomination, made clear that he won’t protect Wall Street from tough oversight if he gets a second term.
Powell pledged Wednesday to let the Fed’s next banking watchdog handle regulation without interference. Fed Governor Randal Quarles has to step down as vice chairman of supervision next month and his successor -- a yet-unnamed Biden administration appointee -- is expected to be far more aggressive in policing JPMorgan Chase & Co., Goldman Sachs Group Inc. and other lending giants.
“That’s the person who will set the regulatory agenda going forward,” said Powell, who could soon learn whether President Joe Biden will nominate him to lead the Fed for another term. “It’s fully appropriate for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes, and I welcome that.”
Powell’s stance on regulation has been a top focus for some Democratic lawmakers, including Senator Elizabeth Warren, who has loudly criticized him for signing off on a number of changes that loosened Wall Street’s leash during the Trump administration. Progressive trade groups have raised concerns that Powell would block more stringent banking rules if Biden reappoints him.
But Powell said that wouldn’t happen. Speaking at a Fed press conference, he argued that the supervision role created by the Dodd-Frank Act “is charged with setting the regulatory agenda” under the law, and he would accept that authority.
Warren wrote to Powell earlier this month, requesting that the Fed break up Wells Fargo. In response to a question about her letter, Powell said the Fed “will take appropriate supervisory action if the firm fails to meet our expectation.” Wells Fargo’s costly asset cap that has limited the firm to its end-of-2017 size for nearly four years, will stay in place until the firm’s problems are fixed, he said.
Senate Banking Committee Chair Sherrod Brown, who with Warren has not yet said whether he would support Powell’s renomination, called the remarks “encouraging.”
“You know my differences with Powell on regulatory stuff and climate,” said the Ohio Democrat. “That’s an encouraging statement.”
Earlier Wednesday, Democrat Jon Tester said he lobbied for another Powell term in a conversation Tuesday with White House Chief of Staff Ron Klain.
Top candidates to replace Quarles could include current Fed Governor Lael Brainard, the board’s lone Democrat. Warren opposed much of Quarles’ agenda as supervision chief, saying the more relaxed oversight could lead to future financial turmoil.
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