Feb 10, 2017

Federal Reserve's point man on bank regulation steps down

Daniel Tarullo submitted his resignation from his seat on the Board of Governors effective April 5th, the Fed said Friday.

Because the position of vice chair for supervision was left unfilled amid Obama-era gridlock, Tarullo took on the responsibilities of implementing the Fed's wide powers for regulating banks given it by the Dodd-Frank financial reform bill.

Why it matters: Donald Trump has stressed his intention to ease up on financial regulations, and Tarullo's exit might just be his reading the tea leaves that tough supervision at the Fed will be frowned upon. With a Republican Senate, it's likely that Trump will be able to fill Tarullo's seat, plus the two others that are vacant.

Who will Trump pick? It's anybody's guess. While Republicans agree (in theory) on reducing financial regulation, President Trump has been all over the map on monetary policy. He warned during the campaign that Yellen-Bernanke stimulus was setting up the economy for a crash, but is also critical of a strong dollar. The two goals of tight monetary policy and a weak dollar are incompatible, making it difficult to induce Trump's preferred type of central banker.

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