Washington • The Senate has confirmed President Donald Trump’s nomination of Randal Quarles to serve on the Federal Reserve, the first step in the Republican’s efforts to remake the nation’s powerful central bank.
Quarles, the head of a Salt Lake City-based investment firm, was approved on a 65-32 vote on Thursday. Senators, by a voice vote, then approved him to be vice chairman for supervision, a position that will give him critical input into GOP efforts to rollback what they see as the regulatory excesses of a 2010 law aimed at preventing a repeat of the 2008 financial crisis.
There are currently three vacancies on the Fed’s seven-member board. So far, Quarles is the only nomination that Trump has made. As a candidate, Trump strongly criticized the Fed for following what he said were interest-rate policies that favored Democrats and for imposing burdensome rules on banks that he said had hurt the economic recovery.
Trump has given no indication of his final choices for the other Fed positions, but with all the vacancies, his nominees will have the power to remake Fed policy on interest rates and bank regulations. The Fed is the primary regulator for the largest U.S. banks.
Though Quarles lives and works in Utah — and considers Roy his hometown — he insisted throughout the nomination process that he is from Colorado. That’s because of a wonky 1913 rule that precludes two people from the same geographic region from serving on the board’s governing panel. Utah’s 12th District, which includes nine Western states stretching from Alaska through Nevada to Hawaii, is already represented by Federal Reserve Chairwoman Janet Yellen of California.
So Quarles offered his provenance as Colorado, where he lived until he was 8 and still spends Christmas every year. That state falls in the 10th District.
Industry groups praised the selection with Rob Nichols, president of the American Bankers Association, saying his group looked forward to working with Quarles to craft a regulatory program “to meet the supervisory needs of our banking system and drive economic growth.”
Utah Sen. Orrin Hatch, chairman of the Senate Finance Committee, said Quarles “is eminently qualified to serve in this important position.”
But critics charged that Quarles, who for many years worked as a lawyer for big banks, was too close to the financial sector and in his Treasury Department positions overseeing Wall Street failed to halt the risky lending practices that led to the 2008 crisis.
Sen. Elizabeth Warren, D-Mass., and a frequent Wall Street critic, said “there is no position in government that has a more important role in stopping the next financial crisis” than the Fed’s supervision post. She said she was opposed to Quarles because he had “argued repeatedly for weaker rules for giant banks.”
The Fed board will have another vacancy next week when Fed Vice Chairman Stanley Fischer steps down. In addition, Trump is deciding whether to nominate Fed Chair Janet Yellen for another four-term term or select someone else. Her current term expires Feb. 3. If she leaves the board, Trump will be able to fill five of the board’s seven seats.
Quarles’ job as vice chairman for supervision will give him an important role in the administration’s efforts to loosen the banking regulations imposed by the Dodd-Frank law. Congress passed that law in 2010 in an effort to prevent a repeat of the 2008 financial crisis, the worst meltdown of the financial system since the 1930s. During the campaign, Trump sharply attacked the Dodd-Frank law, calling it a disaster that had stifled economic growth by restraining bank lending.
Quarles worked in the two Bush administrations. During his confirmation hearing for the Fed job, he endorsed proposals that would trim back the Dodd-Frank regulations.
After leaving his federal posts, Quarles co-founded the Cynosure Group, a private equity firm, with Spencer P. Eccles. Prior to that, he was a partner of The Carlyle Group.
In his late teens and early 20s, Quarles earned a bachelor’s degree from Columbia University and a law degree from Yale, as well as served a mission in Quebec for the Utah-based Church of Jesus Christ of Latter-day Saints.
Quarles’ wife, Hope Eccles, of the well-known Utah family involved in business and philanthropy, is the great-niece of Marriner S. Eccles, who served as the Federal Reserve’s chairman from 1934 to 1948.
When the White House announced the selection of Quarles in July, he was nominated for a vacant Fed board term that expires on Jan. 31 and for an additional 14-year term that would expire on Jan. 31, 2032, as well as the four-term term as the vice chairman for bank supervision. The Senate action Thursday approved the short-term position on the board and the vice chairman’s job but left pending the longer 14-year term.
The Fed banking post created by the Dodd-Frank law had not been filled during the Obama administration because Republicans opposed the administration’s plans to formally nominate then-Fed board member Daniel Tarullo for the job. Instead, Tarullo served informally as the Fed’s top voice on bank regulation until he left the board earlier this year.
— The Salt Lake Tribune contributed to this story.