The Federal Reserve’s vice chair for supervision is arguably the most important financial regulator in the federal government. No agency has greater oversight responsibility of U.S. financial institutions than the Fed. And the vice chair influences what kinds of trades those institutions can make, how they must prepare for unexpected losses, and what punishment to mete out when banks fail to uphold the law.
Hedge funds and private equity firms are sometimes called “shadow banks” because they exist outside the regulatory perimeter, even though they engage in bank-like lending and investment activities.
They want to keep it that way. And President Trump’s expected nomination of Randal Quarles to the vice chair’s role is about as close a guarantee as the shadow banking sector can get that the feds won’t be bothering them any time soon.
Quarles served two stints in the Treasury Department, under both Bush administrations, but afterward, he moved to the Carlyle Group, the $169 billion private equity giant. Quarles was part of the financial services team, which appears to be registered in the Cayman Islands tax haven.