The Federal Reserve’s vice chair who is in charge of policing Wall Street, Randal Quarles, said late last week he is recusing himself from anything related to Wells Fargo.
Reuters reported that in a memo, Quarles reported that he and his family sold their financial stakes in Wells Fargo and paid back a business loan from the bank, but said he will still not be involved in any Federal Reserve decisions about the company. Quarles is considered to be the country’s top banking regulator, and will have an important voice as the Federal Reserve overhauls its supervisory approaches.
Wells Fargo has been under attack ever since it paid $190 million last year to settle its fake account scandal. It is also under investigation by two financial regulators over its auto insurance and mortgage lending practices.
“I have made this decision in order to avoid even the appearance of a conflict,” Quarles wrote the Fed’s chief counsel Mark E. Van Der Weide. The report noted that Quarles has a connection to Wells Fargo via his father-in-law, Spencer Eccles, who was the leader of First Security Corp., the Utah bank that Wells Fargo acquired in 2000 in a $2.9 billion deal. Since then, Eccles has had a non-executive position within Wells Fargo; a spokesman for the Federal Reserve told Reuters that Eccles doesn’t have a formal role at the company.
The Quarles memo comes a few weeks after William Dudley, the president of the Federal Reserve Bank of New York, was in trouble for not disclosing that his sister-in-law worked at Wells Fargo. The report noted that conflicts of interest, whether outright or assumed, have long been a point of contention between regulators and the people they hire with real-world experience, which critics assert makes regulation difficult.