Last October, as part of the Podesta email leaks, we [Zero Hedges] disclosed the particularly close relationship between Fed governor Dan Tarullo and Barack Obama, which emerged as part of a previously undisclosed memo involving the AIG bailout. We speculated that as a result of this now public disclosure it was possible that Tarullo's days at the Fed were numbered should Donald Trump win the election. Trump won, and moments ago [on February 10th] Dan Tarullo unexpectedly announced that he is resigning in early April, just days after the Fed's general counsel Alvarez also announced that he is departing the Fed.
Tarullo’s decision will clear the way for President Donald Trump to select a candidate for the bank supervision position. Trump is likely to choose someone more in line with his desires to roll back the regulations put in place by the Dodd-Frank Act, which overhauled bank supervision in the wake of the 2008 financial crisis.
Tarullo said in a short resignation letter to Trump that he planned to step down “on or around April 5, 2017.” He did not provide a reason for his decision.
There are currently two vacancies on the Fed board because Congress refused to confirm two nominees of former President Barack Obama. Tarullo’s departure will mean that Trump will have the chance to fill three Fed vacancies in his first months in office.
The Dodd-Frank Act created a position of vice chairman for bank supervision. But the Obama administration never filled the post, reflecting in part the sharp disagreements between Democrats and Republicans in Congress over how the financial system should be regulated. Instead, Tarullo has effectively served as the Fed’s point person on bank regulation since 2009.
"Dan led the Fed's work to craft a new framework for ensuring the safety and soundness of our financial system following the financial crisis and made invaluable contributions across the entire range of the Fed's responsibilities," Fed Chair Janet Yellen said in a statement.
President Barack Obama appointed Tarullo in 2009 for a term that would have expired at the end of January 2022.
"It has been a great privilege to work with former Chairman Bernanke and Chair Yellen during such a challenging period for the nation's economy and financial system," Tarullo said in his resignation letter. He was involved in implementing the Dodd-Frank reforms created after the 2008 financial crisis to prevent a repeat.
His resignation came after Trump took action to start easing regulations on the financial industry.
Trump, who won the White House on a populist platform filled with jabs at Wall Street titans, said previously he would cut "a lot" of the changes brought about by the Dodd-Frank Act.
White House press secretary Sean Spicer has said the rules hold back economic growth. He said Dodd-Frank is "frankly not doing what it's supposed to do."
Tarullo said in a meeting last year that banking regulators must defend tough rules governing Wall Street and resist efforts to dilute regulations that might prevent a future financial crisis.
"It is critical that we not forget our still quite recent history," Tarullo told a meeting of financial market researchers in Washington, referring to the 2008 housing bust that pushed global financial markets to near collapse.
Tarullo, 64, was a law professor at Georgetown University before joining the Fed.
Submitted by Jeff