Fed Official Quarles Poised to Lead Financial Stability Board
November 19 2018 - 9:24PM
Dow Jones News
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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