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Raskin Fed appointment would warn Wall Street

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WASHINGTON – US President Joe Biden’s decision to appoint Sarah Bloom Raskin as head of Federal Reserve regulation and oversight will place a Progressive in the most powerful oversight role of Wall Street’s biggest banks, a move that does not bode well for the industry.

Raskin, former Fed governor and head of the Treasury under former President Barack Obama, will replace Randal Quarles who was appointed Fed vice chairman for oversight by former Republican President Donald Trump in 2017, a source familiar with. folder.

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A source close to the process said Biden selected Raskin. His appointment would be subject to confirmation by the Senate.

Quarles resigned https://www.reuters.com/world/us/feds-randal-quarles-resign-end-december-2021-11-08 from his post in October and left the central bank at the end of December.

The banking oversight role is the most prominent of several vacancies on the Fed’s seven-member board of governors, which can be filled by Biden, giving the first-term Democrat the opportunity to steer both the Wall Street surveillance and monetary policy for years to come.

Biden also picked Biden also picked economists Lisa Cook and Philip Jefferson to help fill the Fed’s board, the source said economists Lisa Cook and Philip Jefferson to help fill the board of directors with the Fed, the source said.

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Raskin is expected to take a much tougher stance on Wall Street than Quarles, who pissed off progressives with an industry-friendly approach that included relaxing several rules introduced in the wake of the 2007-2009 global financial crisis.

She would lead policy on thorny issues, including climate change financial risks, community lending rules, and fintech companies, and would likely review several of the changes to Quarles’ rules that covered the rules on speculative investments by companies. banks, derivatives exchanges, liquidity and capital.

Biden has already decided to reappoint Fed Chairman Jerome Powell for a second term and Governor Lael Brainard to the other post of Fed Vice Chairman, which focuses on the economic and monetary policy agenda of the Fed.

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As with those two appointments, Raskin is expected to be confirmed by the slightly divided Senate where she could face a very partisan reception. Raskin has already been confirmed twice, but those votes predate the current partisan resentment that pervades Capitol Hill.

For its part, the banking industry had been pushing for Atlanta Fed Chairman Raphael Bostic, who was seen as a more moderate choice, willing to listen to the industry, according to two industry insiders.

A Harvard-trained lawyer with an undergraduate degree in economics from Amherst College, Raskin served on the Fed Board from 2010 to 2014 before moving to the Treasury as Deputy Secretary.

While his role did not then specifically involve banking supervision, Raskin took a firm stance on key elements of the Fed’s post-crisis reform agenda.

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For example, she called proprietary trading “little or no real economic value”. She also pleaded for a strict interpretation of the “Volcker rule,” a major reform limiting speculative investment that Quarles has relaxed over the past four years.

Quarles said he has adapted this rule and others to the risks of banks and that the exceptional performance of the sector https://www.reuters.com/business/finance/top-us-banks-smash-profit-estimates-rebounding- economy-2021- 07-14 in the midst of the economic crisis of the pandemic shows that it has not weakened the system.

Powell, who like Quarles is a former partner of private equity giant Carlyle Group, supported Quarles’ changes but said he would allow the new chief supervisor to take the lead on regulatory matters.

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REDUX DEREGULATION

If confirmed, Raskin faces a dilemma https://www.reuters.com/markets/us/bidens-new-fed-regulation-chief-faces-dilemma-over-trump-rules-rewrite-2021- 12-16: How much time and political capital to spend reviewing Quarles’ freebies on Wall Street rather than focusing on new issues https://www.reuters.com/business/finance/whether-centrist -or-progressive-feds-new-regulatory-chief-has- long-to-do-list-2021-09-23 such as climate change, cryptocurrencies and fintech.

A major effort to overhaul Quarles’ work would absorb the resources and political oxygen needed to meet other Democratic priorities, and could be opposed by other regulators and even some centrist Democratic lawmakers, Reuters reported https: // www.reuters.com/markets / us / bidens-new-fed-regulation-chief-faces-dilemma-over-trump-rules-rewrite-2021-12-16.

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As governor of the Fed’s board of directors, Raskin would also have a vote on monetary policy. If confirmed, it will arrive at the Fed at a critical time for the central bank’s management of the U.S. economy and its recovery from the COVID-19 pandemic that triggered a short but historically deep recession in 2020.

At the end of 2021, the Fed changed its policy in the face of an inflation rate that reached almost three times the flexible annual target of 2% of the central bank. Soaring prices for consumer goods and services, initially dismissed as a “transient” coronavirus pandemic-oriented overhang, has become a significant political issue and headache for Biden and the Fed. (Reporting by Michelle Price, Pete Schroeder and Andrea Shalal Editing by Dan Burns, Chizu Nomiyama and Leslie Adler)

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