By Ryan Tracy 

WASHINGTON -- A top Federal Reserve official is poised to lead a global body overseeing financial regulations, according to people familiar with the matter, overcoming questions abroad about President Trump's posture toward international institutions.

Randal Quarles, the Fed's vice chairman for bank supervision, is expected to be named to chair the Financial Stability Board, these people said. The decision won't be final until it is announced. An FSB spokesman declined to comment but said an announcement would be made before Dec. 1, when Bank of England Gov. Mark Carney's term as FSB chair expires.

The decision would be a win for the Trump administration, which had backed Mr. Quarles and viewed his candidacy as a chance to influence the direction of global financial regulatory policy, people familiar with the matter said.

As recently as August, Mr. Quarles's ability to secure the post was in doubt.

Officials in some Western European countries argued that an American shouldn't get the job, given Mr. Trump's actions at international summits, The Wall Street Journal has reported. The president pulled his support from a Group of Seven communiqué after a June meeting in Canada and criticized the North Atlantic Treaty Organization in July.

The FSB was established in April 2009 with the goal of reforming global financial regulations. It doesn't have the power to order around member countries, which control their own financial rules. But the FSB is important because regulators use it to establish baseline international standards and pressure peers in other countries to adopt them.

Mr. Quarles gave a speech in June calling America's active participation in the FSB "important to our nation" and to U.S. banks.

Under the FSB charter, the chair serves a three-year term. Mr. Carney has chaired the board since 2011, serving two terms and a roughly one-year extension. Mr. Quarles's term as FSB chair would coincide with his term as Fed vice chairman, which expires in October 2021.

A European official viewed as Mr. Quarles's rival for the FSB job, Dutch central bank Governor Klaas Knot, is set to be named FSB vice chair, according to a person familiar with the matter. FSB members are expected to agree that Mr. Knot would serve a three-year term as chair following Mr. Quarles's term, this person said.

Under the Obama administration, the U.S. pushed for strict rules on global banks. The Fed often adopted domestic regulations that were tougher than those agreed to internationally, a policy known as "gold plating."

Mr. Quarles has said he thinks banking rules can be made simpler without undermining safety. He has led the Fed in a broad review of Obama-era regulations, including an Oct. 31 proposal to loosen liquidity rules for some large U.S. lenders.

In congressional testimony last week, he said the Fed needs to think about whether U.S. rules could drive risky activities elsewhere.

"If you have an unlevel playing field, you'll have risky activities moving to the weakest parts of that system," Mr. Quarles told the House Financial Services Committee. "We in the U.S. may suffer...if you get these systemic imbalances that result from regulatory incentives we create."

Mr. Knot in a September speech in Washington said: "We should be wary of recent indications of diminishing momentum for regulation."

Write to Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

November 19, 2018 21:09 ET (02:09 GMT)

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