It’s Trump’s Fed now.
A powerful — and influential — gatekeeper at the Federal Reserve unexpectedly resigned on Friday, giving the Trump administration greater influence than previously expected over the future of regulation and the cost of money.
Daniel Tarullo, who started as a member of the Fed’s Board of Governors in 2009 during President Obama’s first term, announced that he is stepping down from his role effective April 5 — about five years before his term was set to expire.
“It has been a great privilege to work with former Chairman [Ben] Bernanke and Chair [Janet] Yellen during such a challenging period for the nation’s economy and financial system,” he wrote in a letter addressed to Trump.
Tarullo gave no explanation for his sudden departure.
Tarullo was an influential board governor, and helped guide the central bank through some of the toughest monetary decisions that were the hallmarks of the Obama era.
He favored tougher banking rules that forced banks to set aside more capital, and easier lending rates that kept borrowing costs low.
The central banker’s resignation means that Trump now has at least three slots to fill on the seven-person board. Trump will also designate the chair next year, when Yellen’s term is up.
Trump, before the election, criticized Yellen’s tenure, saying she should be “ashamed of herself” for her monetary policies, and isn’t expected to nominate her for another term.
It’s unclear who would be in line to replace Tarullo, but it’s unlikely that Trump would find someone in his mold.
David Nason, a former finance executive at General Electric, has been favored for a Fed job, but it’s unclear if he would get it, according to the Wall Street Journal.
The impact of the absence could be immediate — as the Federal Open Market Committee decides whether to hike rates at a faster pace in the coming months than previously expected.
“The FOMC could, in our view, become more hawkish and do so more quickly than previously expected,” Brian Gardner, an analyst at KBW, wrote in a research note.
The announcement immediately sent some bank shares spiking. Goldman Sachs shares ended the day up by $1.17, to $242.72.
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