Fed’s Quarles recuses himself from Wells-related actions
WASHINGTON — The Federal Reserve Board on Friday announced that Vice Chairman for Supervision Randal Quarles will recuse himself from supervisory matters related to Wells Fargo to avoid “even the potential appearance of a conflict of interest.”
Quarles, who held stock in Wells Fargo that he divested upon his confirmation to the Fed board, is recusing himself voluntarily, according to the Fed statement. The recusal is not required by law, but “in light of his extended family's prior sale of their interest in a bank to Wells Fargo, he has chosen to recuse himself from matters specifically involving the firm.”
Quarles' wife is a member of the Eccles family, who were owners of First Republic Bank, which was headquartered in Utah. The bank, which held $23 billion in assets and had more than 200 branches, was acquired via an all-stock deal worth an estimated $2.6 billion in 2000. At the time, it was Wells’ largest acquisition.
While Quarles’ recusal would render him unable to vote on any enforcement of supervisory matters relating to Wells directly, it would not require Quarles to recuse himself on matters that affect banks more generally, even if Wells is among the banks affected.
Still, the impact of the recusal could be significant considering the regulatory scandals that have dogged Wells Fargo of late. Last year, the Consumer Financial Protection Bureau fined the bank $140 million related to a cross-selling scandal where employees signed up customers for accounts they did not authorize. Fed Chair Janet Yellen has said in congressional testimony that the central bank is weighing its own actions against the bank.
Wells has also found itself at the center of investigations related to its mortgage and auto lending businesses. Last week, the bank's problems were even cited by President Trump, who tweeted that "fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped ... but will be pursued and, if anything, substantially increased."