Economy

Fed Governor Quarles: 'We ought to be taking a fresh look at everything'

Key Points
  • New Federal Reserve Governor Randal Quarles said that he wants the central bank to be more transparent about what it expects from banks.
  • The remarks were the first from Quarles since he was confirmed in early October. He is President Donald Trump's first Fed appointment.
  • Quarles' spoke at a banking conference in New York and provided no views on interest rate policy.

In his first public remarks Tuesday, new Federal Reserve Governor Randal Quarles said that he believes the central bank needs to give serious consideration to what banking regulations need to be changed.

"We ought to be taking a fresh look at everything," Quarles said during a question-and-answer session in New York. He said that "in a very short period of time" the Fed will be looking at ways to make the regulatory process more transparent.

Quarles is President Donald Trump's first appointment to the Fed board and was confirmed Oct. 5, and is expected to take a more hands-off approach when it comes to banking regulations. There are still three remaining vacancies.

He serves as vice chair of bank supervision, a position created as part of the post-financial crisis reforms under the Dodd-Frank measures.

Speaking about the various processes and rules put into place since the crisis, Quarles said he'd like to see the Fed become more transparent about what it wants from banks in the annual stress tests, a frequent complaint from the industry.

"Part of transparency is being open to input," he said. "One of the reasons for transparency is part of the basic view of the relationship between the government and the governed. If there are going to be rules, we should probably let the people know what they are."

Changes to stress testing, for example, are "on the front burner," Quarles said, adding that he'd like the rules to be simpler and "tenor of supervision" to change.

In his short time at the Fed, Quarles said he has found "quite an openness" there for "taking a fresh look at regulation."

"I think the regulation part will proceed pretty straightforwardly," he said. "It won't be to everyone's satisfaction."

Quarles did not offer any views on monetary policy. Markets figure a December interest rate hike is a lock, there though is less certainty about the pace into 2018.