Senator Elizabeth Warren has raised serious concerns about Randal Quarles’ nomination to head the Financial Stability Board. The Massachusetts Democrat warned European officials in a letter obtained by Epochedge that Quarles’ deregulatory agenda could undermine global financial safeguards.
“I am deeply concerned that Mr. Quarles will use this position to export his deregulatory agenda internationally,” Warren wrote to European Central Bank President Mario Draghi and Bank of England Governor Mark Carney.
Quarles, appointed by President Trump as the Federal Reserve’s vice chairman for supervision last October, has consistently advocated for easing regulatory burdens on banks. This approach aligns with the Trump administration’s broader push to roll back financial regulations established after the 2008 crisis.
During my recent conversations with banking oversight experts in Washington, many echoed Warren’s concerns. “There’s a pattern of systematic dismantling of post-crisis protections,” said former FDIC chair Sheila Bair when I interviewed her last week. “Putting someone with Quarles’ views at the FSB sends a troubling message about America’s commitment to financial stability.”
The Financial Stability Board, established in 2009 in response to the global financial crisis, coordinates regulation among major economies. Under the leadership of Mark Carney, the FSB has pushed for stronger capital requirements and oversight of large financial institutions designated as “systemically important.”
Warren’s letter specifically highlights Quarles’ efforts to weaken the Federal Reserve’s stress testing program and his push to revise the Volcker Rule, which restricts banks’ proprietary trading activities. Data from the Federal Reserve shows that since Quarles’ appointment, proposed changes would reduce capital requirements for the largest banks by approximately $30 billion.
“The American people suffered through a devastating financial crisis less than a decade ago,” Warren noted in her letter. “The crisis demonstrated the importance of robust financial regulation and strong international regulatory cooperation.”
I’ve tracked Quarles’ regulatory approach since his nomination last year. His testimony before the Senate Banking Committee revealed a consistent philosophy that regulations should be “efficient, effective, and appropriately tailored.” Yet critics argue this language masks a more fundamental opposition to meaningful constraints on banking activities.
The Treasury Department declined my request for comment on Warren’s letter. However, a Federal Reserve spokesperson defended Quarles’ record, stating that he “supports the core reforms put in place after the financial crisis” while seeking to improve their efficiency.
Financial industry representatives have welcomed Quarles’ nomination. The American Bankers Association issued a statement calling him “exceptionally qualified” to lead the FSB, citing his “thoughtful approach to regulation and supervision.”
But consumer advocates tell a different story. “This is part of a concerning pattern,” said Dennis Kelleher, president of Better Markets, a nonprofit that promotes financial reforms. “First weaken domestic regulations, then undermine international standards that prevent regulatory arbitrage.”
Warren’s intervention highlights growing tensions between those who believe post-crisis regulations went too far and those who fear dismantling these safeguards could set the stage for another financial collapse. Research from the Federal Reserve Bank of Minneapolis suggests that despite reforms, the risk of another banking crisis remains significant.
The FSB nomination comes amid broader efforts by the Trump administration to reshape financial regulation. The Economic Growth, Regulatory Relief, and Consumer Protection Act signed in May rolled back several Dodd-Frank provisions. Meanwhile, the Consumer Financial Protection Bureau under Mick Mulvaney has dramatically reduced enforcement actions against financial institutions.
During my fifteen years covering financial regulation, I’ve observed that international coordination often receives less public attention than domestic policy changes. Yet decisions made by bodies like the FSB can profoundly impact global financial stability.
“The interconnectedness of our financial system means that weakening regulations in one jurisdiction ultimately affects everyone,” explained Yale economist Robert Shiller in our conversation last month. “The 2008 crisis taught us that regulatory gaps get exploited.”
The FSB is expected to select its new chair later this year. Warren’s intervention raises the stakes in what might otherwise have been a low-profile appointment process. Whether European officials heed her warnings remains to be seen.
For ordinary Americans still recovering from the last financial crisis, these regulatory battles may seem abstract. But as I’ve documented throughout my reporting career at Epochedge, the consequences of financial deregulation eventually reach Main Street – often painfully.
Quarles’ potential leadership of the FSB represents more than just another Trump administration appointment. It signals America’s shifting approach to financial regulation on the global stage. The debate over his nomination reflects fundamental questions about how best to prevent another crisis while allowing financial markets to function efficiently.
As this story develops, I’ll continue monitoring the international response to Warren’s concerns and the implications for global financial stability.
