By: C. Jay Engel

The WSJ is reporting that Daniel Tarullo has submitted a resignation letter and will be departing the Fed Board in early April. This is an interesting resignation in light of the recent regime change in Washington. One narrative of the Trump administration has been “deregulation.” The WSJ notes that one of the two (now three) vacancies on the Fed Board is the vice chairman position, which is “in charge of bank oversight.” Tarullo took up the regulatory tasks in the absence of the chairman.

Tarullo is an Obama appointee, whose term is not supposed to expire for another 5 years. But since he had become the go-to man for regulatory matters and Trump is expected to pick his own preference for the vice chairman position, there was likely to be a budding conflict within the Fed. His exit creates a much simpler environment for the Trumpians to pursue their goals. Whether or not there is actual deregulation or another government sham under the label of deregulation remains to be seen. What is important is the extent of the regime change. 

This news comes on the the heels of another Fed man — general counsel Scott Alvarez — who made his own retirement announcement earlier this week. Alvarez has a long history at the Fed, but most relevant to the deregulation theme is this from a WSJ piece several years ago:

He was at the center of efforts to stabilize the financial system in 2008, and has fiercely defended the Fed’s role and its authority to provide support for big banks during the crisis. Mr. Alvarez also has played a key role in writing the new rules implementing Dodd-Frank, which was aimed at protecting the system from future crises.

Now that we see a theme in the people retiring, we will watch to see how these vacancies are filled. 

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