[Congressional Record Volume 164, Number 119 (Monday, July 16, 2018)]
[Senate]
[Pages S4970-S4971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      NOMINATION OF RANDAL QUARLES

  Mr. BROWN. Mr. President, it has been a good year to be a Wall Street 
banker. Barely a day goes by that doesn't bring news of another 
consumer protection rollback, another unraveling of taxpayer 
protections, or another handout to Wall Street. The man at the center 
of many of these decisions is right now, on this floor, up for 
nomination to a 14-year term as Governor on the Board of the Federal 
Reserve.
  When Randy Quarles' nomination to serve as Vice Chair of Supervision 
at the Fed--the first person ever to serve in that position--when it 
came before the Senate last year, I urged my colleagues to vote no. 
Quarles' record worried many of us that he wasn't interested in doing 
actual supervision. I said he seemed far too ready to swallow financial 
industry talking points, once again, and relax the rules for Wall 
Street.
  Since then, his record at the Federal Reserve his confirmed the worst 
fears so many of us held. In just 10 months under Mr. Quarles' 
leadership, the Fed has taken steps to systematically unravel Wall 
Street reform.
  Let's look at what happened. Start with the stress test. The Fed 
allowed the seven largest banks to redirect $96 billion that should 
have been used to pay workers, to reduce fees for consumers, and to 
protect taxpayers from bailouts. Instead, they plowed that money into 
share buybacks and dividends that do what? Of course, they reward 
wealthy executives and the biggest investors. Two banks, Goldman Sachs 
and Morgan Stanley, had capital below the required amounts. Those banks 
failed the test, but they got passing grades anyway because they are 
Wall Street. The Fed reportedly called them up and let them haggle over 
the test results. Imagine this happening in school--when you were at 
school growing up in Oklahoma or I in Ohio--to allow them to proceed 
after haggling over the test results. They allowed them to proceed with 
buybacks and dividends that would drain the required capital.
  Under Quarles' leadership, the Fed wants to make funneling money back 
into stock buybacks even easier. The Fed's pending proposal on Big Bank 
capital will allow the eight largest banks in this country--banks each 
worth hundreds of billions of dollars--to redirect up to $121 billion 
into share buybacks and dividends. This is money that could be used to 
protect taxpayers from bailouts.
  Remember, share buybacks and dividends juice stock prices. They do 
little to increase long-term growth or to reward the workers who make a 
company's success possible. Going forward, the Fed also wants to make 
stress tests even easier. Apparently, haggling with the megabanks over 
the scores wasn't lenient enough.
  Quarles has proposed letting bankers comment on the tests before they 
are administered. That is like letting the students write the exams, 
and the Fed is considering dropping the qualitative portion of the 
stress test altogether. That is the part of the test that examines 
banks' risk management processes, data systems, and the fitness of its 
board of directors.
  I understand these board of directors are all paid--I believe in 
every single case of the eight largest banks--at least $200,000 a year. 
The Fed plans changes for the Volcker rule, the rule that stops big 
banks from taking big risks with Americans' money. That rule requires 
the banks make investments in the real economy, not casino-style trades 
using families' checking and savings accounts.
  Lest you think only American banks are getting a handout, soon 
foreign banks will be getting in on the action. This spring, Mr. 
Quarles said the Fed wants to loosen the rules on foreign megabanks. We 
are talking about Deutsche Bank, Santander, UBS, Credit Suisse, and 
Barclays. You have read about those banks. In most cases, those banks 
have broken our laws. These foreign banks have broken our laws time and 
again. Yet we are going to loosen the rules on these foreign megabanks.
  The question I have with all these weakening of protections for 
American taxpayers and American consumers is, What problem exactly is 
the Fed, under Mr. Quarles' watch, trying to solve? Banks increased 
their profits by 13 percent last year. That is before you account for 
the windfall in the tax cut. When you add in the tax benefits, it was a 
28-percent increase in their profits. The banking sector bought back 
$77 billion worth of stock last year. The CEOs of the six largest banks 
got an average raise of 22 percent. So what exactly is Mr. Quarles 
trying to fix? What is not going all the banks' way day after day? The 
CEO of Wells Fargo got a 36-percent raise, even as scandal after 
scandal mounted at the bank under his watch.
  I don't think these megabanks are really the people who need Mr. 
Quarles' help. Maybe you ought to look elsewhere. Maybe look at the 
tellers. The average teller in this country makes $12.50 an hour. Wages 
for ordinary Americans simply aren't moving up.

[[Page S4971]]

  Mr. Quarles was in a very similar position a decade ago in the Bush 
administration. The financial sector was booming, but average Americans 
were sitting around their kitchen tables, feeling less and less secure, 
wondering what they were going to do next.
  During this time when Mr. Quarles served in the Bush administration, 
the Treasury Department's foreclosure filings in Ohio doubled--from 
around 40,000 at the beginning of 2002 to 80,000 by the end of 2006. 
Mr. Quarles just brushed off concerns about the growing troubles in the 
mortgage market. Famously, he said in those days, in 2006, that the 
future looked bright. His actions today suggest he ain't learned a lot 
since. His amnesia and the collective amnesia of this body are just a 
little too familiar in this town. We can't afford any more nominees who 
fail American workers, who fail American homeowners, or who fail 
American taxpayers.
  It always comes back to, whose side are you on? Are you going to 
fight for the little guy, whether she punches a time clock or whether 
he works in a diner, or are you going to fight for the 1 percent? Are 
we here to serve American workers in the middle class, or are we here 
to serve Wall Street? Randal Quarles has made it clear whose side he is 
on. I urge my colleagues to reject his nomination.

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