In this report, we analyze today’s Senate Banking hearing on the nominations of Joseph Otting and Randal Quarles to be Comptroller of the Currency and FRB Vice Chair of Supervision, respectively. Democrats plan to fight not only Mr. Otting’s nomination due to their concerns over his time at One West Bank, but also try to block Mr. Quarles due to his perceived sympathy for industry objectives. While Republicans led by Chairman Crapo (R-ID) pushed the nominees on increasing the transparency of CCAR, reducing Volcker complexity, and recalibrating the SLR, Sen. Warren (D-MA) pushed back hard against any relief and Ranking Member Brown (D-OH) noted an array of concerns. Mr. Quarles emphasized throughout the hearing that he would try to make transparency a theme of his time at the FRB, particularly regarding CCAR, and also indicated that he supports protecting depository institutions from other holding-company activities (perhaps a reference to the restructuring Secretary Mnuchin and the White House have advanced as discussed in Client Report FHC27). This hearing assesses today’s session, which also heard Mr. Quarles stand by the Fed’s dual mandate and Mr. Otting indicate interest in making current capital standards less onerous.
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