WASHINGTON — Randal Quarles was sworn in as a member of the Federal Reserve’s Board of Governors Friday afternoon and as vice chairman for supervision, making him the first person to hold that position since it was created by the Dodd-Frank Act in 2010.
Quarles, a former private equity fund manager and a Treasury official under President George W. Bush, was confirmed by the Senate as a member of the Fed board by a vote of 65-32 last week and later confirmed as vice chair by voice vote. Neither Quarles nor any other member of the Fed board made statements accompanying the announcement.
The swearing-in marks a formal end to a prolonged era of speculation around who President Trump would nominate for the job, which had been filled on a de facto basis by former Gov. Daniel Tarullo, who chaired the Fed’s supervisory committee before he resigned in April.
Several potential nominees were floated, including former Bush Treasury official David Nason and former George H.W. Bush official and corporate attorney Thomas Vartanian. Quarles was formally nominated in July.
His nomination drew some criticism from Democrats, with Sen. Elizabeth Warren of Massachusetts saying on the Senate floor that Quarles had “gone through the revolving door so many times it is hard to keep up.”
But Quarles held his own in his confirmation hearing in July, saying his hope was that bank regulations can be made clearer without subjecting the public to excessive risks. Ultimately five Democrats on the Senate Banking Committee voted to confirm Quarles.
The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.