PYMNTS-MonitorEdge-May-2024

Federal Reserve Vice Chair Pick Looms Over Hill

Fed vice chairman pick?

The parade of political appointees for the incoming Trump administration continues, and as noted in reference to the financial industry, one possible appointment looms large. Bloomberg reported that President-elect Donald Trump may be putting a new position in place: A Federal Reserve vice chairman whose primary purview will be Wall Street.

The post is one created by the Dodd-Frank Act and one that shows, as Bloomberg reported, that there is one part of the legislation that will not be scrapped by the new administration. The impact of the vice chairman is one that is far-reaching, with sway held over big banks and how they interact with the Fed, among other relationships, and how financial regulations may be pruned going forward under the presidency of Donald Trump.

The position was left unfilled during the Obama administration, as he faced implicit opposition in the Senate, controlled as it has been by the Republican party.

In the parlor game that has been the hallmark of financial legislation, if Trump does indeed find, nominate and champion an appointee and that person is confirmed by the Senate, Daniel Tarullo, who has served as Fed governor and also has had oversight of the financial landscape in the past six years, will step aside in that unofficial capacity. That might pave the road for a truncating of some of the regulatory issues facing banks, from stress testing to risk controls.

Several people are on the list as possible candidates to serve as Federal Reserve vice chairman. Among possible candidates mentioned by the newswire are John Dugan, who works with banks on regulations and had been a Comptroller of Currency, and Paul Atkins, who worked at the Securities and Exchange Commission and now advises Trump on appointees. There is also a possible candidate, said Bloomberg, who has a resume that makes banks a bit concerned: Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., who has been a supporter of more stringent capital requirements.

No matter who ascends to the Fed vice chairman position, there will likely be opposition if Dodd-Frank is under wide-scale attack, and that opposition will come from Janet Yellen, who has vowed to continue in her current role as head of the Federal Reserve.

PYMNTS-MonitorEdge-May-2024