--“Alpha dog” of financial regulators to step down in early April
--President Trump to have more freedom to reshape the Fed
Daniel K. Tarullo, the Federal Reserve Board’s top bank regulator, submitted on Friday his two-sentence resignation letter to US President Donald Trump, opening the door for Trump to put his stamp on the central bank’s oversight of Wall Street and monetary policy.
Tarullo played a significant role in setting regulations to prevent another financial meltdown after the 2008 financial crisis. His legacy includes successfully pushing forward tougher regulations on capital and liquidity requirements for megabanks.
“Dan led the Fed's work to craft a new framework for ensuring the safety and soundness of our financial system following the financial crisis and made invaluable contributions across the entire range of the Fed's responsibilities," Chair Janet L. Yellen said after his resignation.
Tarullo, 64, is known as one of the toughest banking regulators, and has singular influence in crafting banking regulations. He wrote to Trump saying he would resign on or around April 5, as a member of the Board of Governors, without stating the reason.
The regulator’s resignation creates the third vacancy in the Fed’s seven-board positions for Trump to fill. The New York businessman-turned-president has blamed “tough” regulations for hampering the country's economic growth and suggested filling vacancies with regulators who will tackle regulations with a light touch.
Trump is expected to appoint a vice chairman of supervision to largely assume Tarullo’s job. It is a never-filled role established by the 2010 Dodd-Frank Act, a US federal law emerging from the chaos of the 2008 financial crisis which allows the government to regulate financial industry.
The president signed an executive order on February 3, instructing regulators to review the rules from the landmark act. Since rewriting the act is unlikely because of partisan gridlock in Congress, the vacancies will give Trump more freedom to alter the way the rules are implemented.
US President Donald Trump signs Executive Orders, including an order to review the Dodd-Frank Act to start to roll back financial regulations of the Obama era, in Washington, DC on February 3, 2017. /CFP Photo
“I am hopeful that the core things [the Fed has accomplished]—capital, liquidity, better risk management and viable resolution strategies—are things that will end up and do command a wide enough consensus, particularly for the largest institutions,” Tarullo said.
The regulator’s tenure at the Fed should have expired on January 31, 2022.
Many had expected him to step down due to Trump’s intention to name the vice chairman, but Tarullo reportedly decided to leave even before the November presidential election, after eight intense years on the job.
Barack Obama shakes hands with Daniel Tarullo after introducing him as his selection to the Federal Reserve Board of Governors during a press conference on December 18, 2008 in Chicago, Illinois. /CFP Photo
As a voter on the Federal Open Market Committee, which sets the US interest rates, Tarullo is known for his cautious rate increases. He is expected to attend the March meeting.
Filling the vacancies will give Trump the opportunity to reshape monetary policy, though it is unclear whether successors would change the current course.
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