Senate Banking Chair urges halt to deregulation until Biden picks

The Senate’s top Democrat in charge of bank oversight wants Federal Reserve Chairman Jerome Powell to pause any financial deregulation until President Joe Biden nominates new members to the central bank.

Sen. Sherrod Brown, chair of the Senate Banking Committee, urged Powell to stop rolling back industry regulations until the president has a chance to select a replacement for outgoing Fed Vice Chair for Supervision Randal Quarles.

“When Vice Chair Quarles was confirmed to his position, banking lobbyists cheered. Not only did he immediately set out a plan to shift post-crisis rules to benefitting industry interests over protecting working families, he dutifully continued his deregulatory efforts even as the economy was shaken by a global pandemic,” Brown wrote in a letter dated Oct. 13.

“A new direction for financial regulation must be determined by whomever the President chooses, and Congress confirms, to critical leadership positions on the Board,” the Ohio Democrat added.

Quarles’ tenure as the Fed’s top bank regulator ends Wednesday and opens yet another high-profile position at the central bank for the White House to fill in the coming months. His position will go unfilled until Biden nominates, and the Senate confirms, a new candidate to oversee the nation’s lenders.

“In light of the expiration of the Vice Chair’s term, he will no longer chair the committee on supervision and regulation,” a Fed spokesperson told CNBC. “That committee will meet as necessary on an unchaired basis. Matters within the committee’s responsibility will proceed to the full board only where there is broad consensus among the committee members.”

Quarles’ separate term as a governor on the Fed’s board runs for another 10 years.

Many Democrats see Quarles’ departure from the vice chair role as a chance to better police merger applications, capital requirements and other regulatory issues facing banks.

Sen. Elizabeth Warren, a Massachusetts Democrat and fellow Banking Committee member, lambasted Quarles in May for what she and other Democrats considered his dangerous and relaxed approach to financial oversight.

“Instead of protecting the system, you spent your time at the Fed cutting holes in the safety net wherever you could,” she said at the time. “Your term as Chair is up in five months. And our financial system will be safer when you are gone.”

Quarles was the first person to fill the supervisory role, a position created by the 2010 Dodd-Frank legislation that redesigned financial sector oversight in the aftermath of the Great Recession. The position had gone unfilled until 2017, when former President Donald Trump nominated him to be one of Powell’s deputies.