Nomination of Raskin for Fed’s head of regulation will get Wall Street’s attention by Reuters

© Reuters. FILE PHOTO: Sarah Bloom Raskin, as Deputy Secretary of the Treasury in October 2014, participates in the open meeting of the President’s Advisory Council on Financial Possibility for Young Americans at the Treasury Department in Washington , October 2nd,

By Pete Schroeder, Michelle Price and Andrea Shalal

WASHINGTON (Reuters) – U.S. President Joe Biden’s decision to choose Sarah Bloom Raskin to lead regulation and oversight at the Federal Reserve will place a step forward in the most powerful role overseeing the biggest banks in the United States. Wall.

Raskin, a former Fed governor and Treasury Department official under former President Barack Obama, will replace Randal Quarles, who was named vice chairman of the Fed by former Republican President Donald Trump in 2017, according to a source. close trust.

A source familiar with the process said Biden chose Raskin. Her nomination will have to be confirmed by the Senate.

Quarles resigns from the role in October and leaves the central bank at the end of December .

The banking supervisory role is the biggest consequence of the several vacancies on the Fed’s seven-member Board of Governors available to be filled by Biden, providing an opportunity for first-term Democrats to steer the direction of the Fed. both monitor Wall Street and monetary policy for years to come. arrive.

Biden also chose Biden also selected economists Lisa Cook and Philip Jefferson to help fill out the seven-member Fed panel, the source said economists Lisa Cook and Philip Jefferson will help fill out the Fed board, sources said. said.

Raskin is expected to take a much tougher stance on Wall Street than Quarles, who has pushed for progress with an industry-friendly approach that includes easing some rules introduced in the wake of the crisis. Global Finance 2007-2009.

She will guide policy on thorny issues including financial risks from climate change, crowdfunding rules and fintech companies, and will likely consider a number of changes. Quarles’ rules cover the regulation of speculative investments, derivatives trading, liquidity and banks’ capital.

Biden has decided to step down as Fed Chairman Jerome Powell for a second term and Governor Lael Brainard to take over as another vice chair of the Fed, which focuses on the Fed’s economic and monetary policy agenda.

As with those two appointments, Raskin will have to be confirmed by the thinly divided Senate, where she could face a highly partisan reception. Raskin has been confirmed twice before, but those votes came before the current partisanship that pervades Capitol Hill.

People who have worked with her say she can build consensus.

“Sarah is an incredibly cooperative individual,” said Kathleen Murphy, CEO of the Massachusetts Bankers Association.

A former CEO of the Maryland Bankers Association, Murphy worked closely with Raskin to navigate the global financial crisis when she was Maryland’s financial regulator from 2007-2010. Together they solved the first bank failure in Maryland in 40 years.

“People feel like they have a say at the table. They may not agree with her … but they feel that their point of view has been heard.”

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

A Harvard-trained attorney with an undergraduate degree in economics from Amherst College, Raskin served on the Fed Board from 2010 to 2014 before transferring to the Treasury Department as deputy secretary.

Although her subsequent role did not specifically involve banking supervision, Raskin took a hardline stance on key elements of the Fed’s post-crisis reform agenda.

For example, she rates the monopoly transaction as “low or no real economic value”. She also pushed for strict interpretation of the “Volcker Rule,” a major reform aimed at curbing speculative investments that Quarles has relaxed over the past four years.

Quarles said he has adapted that and other rules to the banks’ risks and industry excellence -banks-smash-profit-estimate-rebounds-economy-2021- July 14 in the midst of the economic crisis of the pandemic showed that he did not weaken the system.

Powell, who like Quarles is a former partner at the giant private equity firm Carlyle Group (NASDAQ :), supports Quarles’ changes, but has said he will allow the new chief supervisor to take the lead on regulatory matters.

“We are delighted to see President Biden nominate such strong champions of financial protections,” said Barry Lynn, executive director at the Open Markets Institute advocacy group in a statement. dad.

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If confirmed, Raskin faces dilemma 2021-12-16: how to spend more time and political capital reusing Quarles’ Wall Street gifts instead of focusing on new issues long-to-do-list-2021-09- 23 such as climate change, cryptocurrencies and fintech.

A major effort to overhaul Quarles’ work would drain the political oxygen and resources needed to address other Democratic Party priorities and could be thwarted by fellow regulators and even some centrist Democratic lawmakers protested, Reuters reports rewrite-2021-12-16.

As Fed governor, Raskin will also have a vote on monetary policy. If confirmed, she will come to the Fed at a critical time for the central bank’s stewardship of the US economy and its recovery from the COVID-19 pandemic that has triggered a recession. short but deeply historical in 2020.

The Fed at the end of 2021 changed its policy stance in the face of an inflation rate that was nearing three times the central bank’s 2% annual flexibility target. The rise in prices for consumer goods and services, initially seen as a coronavirus pandemic-driven increase and possibly “transient”, has evolved into a significant political issue and headache for both Biden and the Fed.

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