WASHINGTON Rep. Scott Garrett, R-N.J. skipped peppering Federal Reserve Chair Janet Yellen on monetary policy on Tuesday, focusing instead on a critical role that has remained left unfilled on the board: a formal overseer of bank regulation.
President Obama has yet to nominate someone to the position of a second vice chair in charge of bank supervision since it was created under the 2010 Dodd-Frank Act. Instead, Fed Gov. Daniel Tarullo, who heads the committee on bank supervision at the board, has assumed the role on a de facto basis.
"Would you say that Governor Tarullo is effectively holding that position until that is completed, until the appointment is made?" Garrett asked Yellen, who was appearing before the House Financial Services Committee on Tuesday to testify on the Fed's semiannual monetary policy report to Congress.
Yellen conceded that Tarullo "takes the lead" on such issues, but all members of the board have a say. Under the financial reform law, the second vice chair could be summoned by lawmakers to testify before Congress on progress being made by regulators to implement the Dodd-Frank law.
Garrett called on Yellen to require Tarullo to testify on such matters given that the governor is effectively serving in that capacity.
"Would you commit them to have Governor Tarullo come and testify on federal rulemaking before this committee, since he seems to be filling out that role until the president makes the [appointment]? Garrett said.
The question appeared to flummox Yellen, who refrained from committing the governor, noting he has appeared before the committee several times to testify on Dodd-Frank rulemaking and other topics. (Indeed, Tarullo's last appearance before the House Financial Services Committee was last week, when he testified on the Volcker Rule.)
While it's likely that Yellen simply didn't want to speak for a colleague on the board, it's worth noting that she has only been in office for 11 days as Fed chair. Since Tarullo's role is not statutory, it's Yellen's prerogative to reorganize the board as she sees fit. Her refusal to commit Tarullo could open the door to potential rumors of a reshuffling.