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Fed regulator nominee Quarles promises more transparency

By Eric DuVall
Randal Quarles is sworn in before the Senate Banking Committee prior to his nomination hearing on Thursday. Quarles is President Donald Trump's choice to serve as vice chair for oversight at the Federal Reserve. Photo by Erin Schaff/UPI
1 of 2 | Randal Quarles is sworn in before the Senate Banking Committee prior to his nomination hearing on Thursday. Quarles is President Donald Trump's choice to serve as vice chair for oversight at the Federal Reserve. Photo by Erin Schaff/UPI | License Photo

July 27 (UPI) -- President Donald Trump's pick to regulate the Federal Reserve told senators at a nomination hearing Thursday that there needs to be more transparency in how the system evaluates big banks.

Randal Quarles, who was chosen to be the first ever Federal Reserve vice chairman for oversight, told members of the Senate Banking Committee the stress tests used to review banks need to be more straight-forward.

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Banks have complained about the stress tests since they were implemented, saying they are not aware beforehand what Fed regulators are really measuring when they evaluate a bank's ability to withstand a financial crisis -- like the one that crippled the global banking system in 2008.

Quarles, a top Treasury Department official under former President George W. Bush, also said Thursday he would advocate for a simplified interpretation of the Volker Rule, which bans commercial banks from using customer deposits as capital for their own investment strategies.

The Volker Rule was a key reform demanded by many Democrats as part of the Dodd Frank Act, the sweeping banking reform suite passed in the wake of the Great Recession.

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"Regulatory policies enacted since the financial crisis have improved the safety and soundness of the financial system," Quarles said. "But as with any complex undertaking, after the first wave of reform, and with the benefit of experience and reflection, some refinements will undoubtedly be in order."

The job Quarles is seeking is also part of the Dodd-Frank reforms -- though the position went unfilled when Senate Republicans refused to confirm former President Barack Obama's nominee, who ended up serving at the Federal Reserve under a similar title anyway.

Democrats on the panel questioned Quarles about his ties to the banking industry, and whether he was capable of providing oversight of an industry he's championed in the past.

Asking about his history and whether he'd ever sided against big banks before, Sen. Elizabeth Warren, D-Mass., a leading liberal critic of big banks, said, "That's not a record that should give Americans as a whole a lot of confidence in you."

Sen. Sherrod Brown, D-Ohio, questioned whether Quarles would have helped avoid the 2008 financial crisis, or whether he would've deferred to big banks.

"Many of his statements leading up to the crisis lead me to wonder whether he was asleep at the switch or willfully turning a blind eye to Wall Street abuses," Brown said.

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