US Fed’s Tarullo resigns, leaving 3rd vacancy
The Federal Reserve governor in charge of banking oversight submitted his resignation on Friday, creating a third vacancy for US President Donald Trump to fill.
Daniel Tarullo, who helped enforce banking rules in the wake of the global financial crisis, will leave the central bank April 5, nearly five years before his term expires.
In a brief letter to Trump, Tarullo, 64, gave no reason for his departure.
The resignation means Trump may have the opportunity to significantly influence the composition of the board, which sets the benchmark lending rate.
Janet Yellen’s four-year term as Federal Reserve chair is due to expire in February 2018, and given Trump’s criticism of the Fed and of Yellen, he is widely expected to appoint a new chief.
During his campaign, Trump attacked the Fed’s independence, accusing it of deliberately keeping interest rates low to support former President Barack Obama.
Yellen has said repeatedly the Fed does not allow politics to influence monetary policy decisions.
However, while Trump can replace Yellen as chair, her term on the board extends until January 2024, and while Fed chairmen have usually resigned if they are replaced in the leadership role, it is not required.
If she resigns, that would offer Trump a fourth Fed vacancy as well as the chance to designate a new chair of the board, which could dramatically alter the central bank’s policy decisions.
In addition, Vice Chair Stanley Fischer’s term expires in June 2018.
“Tarullo’s resignation only further cements our view that significant change is coming to the Federal Reserve Board of Governors over the next 18 months,” Barclays Research said in a client note.
Tarullo’s departure comes at a time when the Fed’s regulatory role may take on increased relevance.
Since taking office, Trump has announced a wide-ranging roll-back of financial rules and regulations, including those created under the post-crisis Dodd-Frank reform laws, in an effort to create more business-friendly markets.
No Comments yet