(Reuters) - While Wall Street banks cheered the renomination https://www.reuters.com/business/finance/biden-renominates-powell-fed-chairman-brainard-vice-chair-2021-11-22 of U.S. Federal Reserve Jerome Powell on Monday, Democratic progressives were left frustrated at the White House's failure to announce a tough new regulatory chief who they hope will crack down on banks.
The Fed's current head of supervision Randal Quarles https://www.reuters.com/world/us/feds-randal-quarles-resign-end-december-2021-11-08 stepped down from that powerful role overseeing the country's largest lenders in October and is due to leave the central bank entirely at the end of the year. Biden said the supervision post and other Fed picks would be announced in early December.
Lael Brainard https://www.reuters.com/markets/us/brainard-influential-fed-governor-expand-role-vice-chair-2021-11-22, a fellow Fed governor and Treasury official under former President Barack Obama's administration, had been seen by Washington insiders as the leading candidate to replace Quarles after opposing his efforts to ease bank regulations.
However, she did not want the supervision post and was looking for a more senior role, according to two people with knowledge of the matter. Instead, she will step up to become Fed Vice Chair, the White House said on Monday.
That sparked frustration among progressive groups, eager for the Fed to crack down on Wall Street and to step up efforts to tackle climate change and overhaul community lending rules.
Whoever ultimately gets the role faces a packed agenda.
“It’s problematic,” said Todd Phillips, director of financial regulation at the Center for American Progress, a liberal think tank. Following an announcement, it could take until February for the new vice chair to be confirmed by the Senate.
“The fact that it’s been unfilled since early October and it seems like President Biden isn’t going to nominate someone until December means that it's going to be a long time until that position is filled.”
Brainard opposed efforts by Quarles to use the Fed’s discretion to extend capital and liquidity relief to large lenders, its relaxation of annual health checks for big banks, revisions to the Volcker Rule banning speculative bank investments, and a decision to scrap a requirement for big banks to hold capital against certain swap trades, among other changes.
Even though she had been the lone dissenting voice on such issues, Brainard had acted as a moderating influence on the Fed’s deregulatory agenda, Reuters has previously reported https://www.reuters.com/article/us-usa-fed-brainard/how-an-obama-fed-appointee-is-scuttling-wall-streets-bid-to-ease-rules-idUSKCN1TF14E, winning her support from progressive Democrats who likewise worried Quarles' Wall Street giveaways were increasing systemic risks.
Other names floated for the supervision role in recent months, according to analysts and lobbyists, include: Sarah Bloom Raskin, a former Fed governor; Atlanta Fed President Raphael Bostic; acting Comptroller of the Currency Michael Hsu; U.S. Treasury under-secretary Nellie Liang; and Mehrsa Baradaran, a law professor who had previously been floated for the Comptroller role.
While the S&P Bank Index was up 1.72% on Monday's news, the renomination of Powell, who was strongly criticized by progressives for backing Quarles' changes, will spur progressives to renew their push for a progressive supervision chief.
Jeremy Kress, a law professor at the University of Michigan and a former Fed official, said the decision to stick with Powell “ups the ante” for Biden to select a strong regulatory lead as soon as possible.
By Pete Schroeder and Michelle Price
